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Abstract
During the 1970s and 1980s the environmental agenda moved to
prominent position among legal considerations in agriculture. One element
of this agenda involves farmer and lender liability for cleanup cost under
CERCLA as amended by SARA. This study examines the potential liability
for lenders under this legislation. Next, the study investigates some
potential actions and consequences for intermediaries from a theoretical
finance perspective. Specifically, the paper addresses changes in credit
risk resulting from the emerging agenda. In addition, the adverse
selection problem in credit is examined for potential insights into the
credit decision. Finally, the study concludes with practical advise for
financial intermediaries in agriculture.