CREDIT SCORING, LOAN PRICING, AND FARM BUSINESS PERFORMANCE

Peter J. Barry and Paul N. Ellinger

Western Journal of Agricultural Economics, 1989, vol. 14, issue 01

Abstract: In light of recent developments in agricultural credit evaluations, this study employs a multiperiod simulation model that endogenizes farm investment decisions, credit evaluations, and loan pricing based on the credit scoring procedures of agricultural lender. Model results show that credit-scored pricing yields time patterns of performance, credits classifications, and interest rates that parallel the firm�s investment, financing, and debt servicing activities. Moreover, the lender�s price responses dampen growth incentives as credit worthiness diminished, stimulate growth as credit improves, and lead to similar capital structures over time.

Keywords: Agricultural Finance (search for similar items in EconPapers)
Date: 1989
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