THE PROFITABILITY OF AGRICULTURAL LOANS BY COMMERCIAL BANKS

Eddy L. LaDue, Jerry L. Moss and Robert S. Smith

Journal of the Northeastern Agricultural Economics Council, 1978, vol. 07, issue 01, 5

Abstract: Data collected from a sample of New York banks were used to assess factors expected to influence the profitability of the various loan programs of commercial banks. Loan loss and loan service costs were lower for farm loans than for either installment or commercial loans. Although not required to maintain compensating balances, farmer time and demand deposits represented 23 percent of outstanding loan balances. The high rate of turnover on farm mortgage loans resulted in an average loan repayment period of 6.2 years, only 40 percent of the original financing period. Lower farm loan costs indicate that banks could charge 3/4 percent lower interest on farm loans than commercial loans.

Keywords: Agricultural Finance; Financial Economics (search for similar items in EconPapers)
Date: 1978
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nareaj:159049

DOI: 10.22004/ag.econ.159049

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