Credit Risk Migration Analysis of Illinois Farm Business: Possible Impacts of Farm Business Cycle

Tianwei Zhang and Ani Katchova

No 19292, 2005 Annual meeting, July 24-27, Providence, RI from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This study uses the cohort approach to estimate the credit risk migration probability of farm business. Using data from the Farm Business and Farm Management, this study rates the credit risk into 10 risk levels plus a default level, defines a farm business cycle with peak, normal and trough periods and evaluates the effect on farm financial performance of the farm business booms and slumps. The results show that the farms with low credit risk are more likely to stay in the same risk level but the farms with high credit risk have the trend to improve their risk situation and move upwards. The results also show that the credit risk ratings are more likely to move upgrade during farm business cycle peaks.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Pages: 23
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea05:19292

DOI: 10.22004/ag.econ.19292

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