Factors affecting the agricultural loan decision-making process

Allen Merril Featherstone (), Christine A. Wilson, Terry L. Kastens and John D. Jones

Agricultural Finance Review, 2007, vol. 67, issue 1, pages 13-33

Abstract: Agricultural lenders in today’s environment face many challenges when evaluating the creditworthiness of farm borrowers. To address these challenges, a survey was conducted with financial institutions in Kansas and Indiana where agricultural lenders were asked for their responses to hypothetical agricultural loan requests. Each loan request differed by the borrower’s character, financial record keeping, productive standing, Fair Isaac credit bureau score, and credit risk. Lenders provided information about themselves and their financial institutions. The survey data obtained determine the relative importance of financial and nonfinancial information when analyzing agricultural loan applications. Tobit models are estimated to identify the borrower and lender characteristics that are important in determining loan approval, while OLS models are used to investigate the factors that affect interest rates offered to farm borrowers. The results offer a comparison of agricultural lending between two important agricultural states and provide lenders with insight on the factors that influence the decision-making process of other agricultural lenders.

Keywords: Agricultural loans; Credit bureau score; Credit evaluation; Interest rates (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/Insight/viewContentI ... le&contentId=1784595 (text/html)
Cannot be freely downloaded

Related works:
Working Paper: Factors Affecting the Agricultural Loan Decision-Making Process (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eme:afrpps:v:67:y:2007:i:1:p:13-33

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emeraldinsight.com/afr.htm

Access Statistics for this article

Agricultural Finance Review is edited by Professor Calum G. Turvey

More articles in Agricultural Finance Review from Emerald Group Publishing
Series data maintained by Chris Harris ().