Loan survival: Are Black farmers more likely to default?

Marie‐Cécile Vekemans, Gianna Short, Charles B. Dodson and Bruce Ahrendsen

Applied Economic Perspectives and Policy, 2024, vol. 46, issue 1, 137-153

Abstract: This paper discusses differences in the likelihood of loan default between Black and other farmers who took out USDA direct operating loans from 2011 to 2020. By controlling for financial, demographic, and other factors using a Cox proportional hazards model, we found that Black farmers have a higher incidence of default than other farmers. We advanced the research on the relative loan performance of different racial/ethnic minority groups, revealing heterogeneity in the likelihood of default that indicates using a single grouping for all minorities obscures important differences. There could be multiple contributing factors to higher rates of default among Black borrowers that deserve future attention and study, though it is beyond the scope of this paper to identify a causal mechanism.

Date: 2024
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https://doi.org/10.1002/aepp.13400

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Persistent link: https://EconPapers.repec.org/RePEc:wly:apecpp:v:46:y:2024:i:1:p:137-153

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