The determinants of loan acceptance: a case study of French farms

Geoffroy Enjolras and Philippe Madiès ()
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Philippe Madiès: CERAG EA 7521, Univ. Grenoble-Alpes

Economics Bulletin, 2019, vol. 39, issue 1, 358-371

Abstract: Bank financing is a crucial issue for farm development and sustainability. This paper analyzes the credit-granting process to farms by identifying the main criteria that are used by banks to decide whether a loan is to be accepted, and according to which modalities. Using original individual data collected in a French bank and processing logit, ordered logit and multinomial logit models, we show that farms benefiting from a good capital structure and wealth have a higher probability of receiving the requested loan. The analysts' opinion is central to the outcome of the loan process. Such information may be useful for the bank by making explicit the principal decision criteria for loan granting.

Keywords: Bank loan; Credit risk; Agricultural finance; Farms; France (search for similar items in EconPapers)
JEL-codes: G2 Q1 (search for similar items in EconPapers)
Date: 2019-02-18
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Related works:
Working Paper: The determinants of loan acceptance: A case study of French farms (2017)
Working Paper: The determinants of loan acceptance: a case study of French farms (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-18-00578

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