Credit Scoring, Loan Pricing, And Farm Business Performance
AbstractIn light of recent developments in agricultural credit evaluations, this study employs a multiperiod simulation model that endogenizes farm investment decisions, credit evaluations, and loan pricing based on the credit scoring procedures of agricultural lender. Model results show that credit-scored pricing yields time patterns of performance, credits classifications, and interest rates that parallel the firmÂ’s investment, financing, and debt servicing activities. Moreover, the lenderÂ’s price responses dampen growth incentives as credit worthiness diminished, stimulate growth as credit improves, and lead to similar capital structures over time.
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Bibliographic InfoArticle provided by Western Agricultural Economics Association in its journal Western Journal of Agricultural Economics.
Volume (Year): 14 (1989)
Issue (Month): 01 (July)
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- Zhao, Jianmei & Barry, Peter J. & Katchova, Ani L., 2008. "Signaling Credit Risk in Agriculture: Implications for Capital Structure Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(03), December.
- Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Factor Markets Working Papers 123, Centre for European Policy Studies.
- Featherstone, Allen M. & Wilson, Christine A. & Kastens, Terry L. & Jones, John D., 2005.
"Factors Affecting the Agricultural Loan Decision-Making Process,"
Proceedings: 2005 Agricultural and Rural Finance Markets in Transition,October 3-4, 2005; Minneapolis, Minnesota
132749, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
- Allen M. Featherstone & Christine A. Wilson & Terry L. Kastens & John D. Jones, 2007. "Factors affecting the agricultural loan decision-making process," Agricultural Finance Review, Emerald Group Publishing, vol. 67(1), pages 13-33, May.
- Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Working Papers 122846, Factor Markets, Centre for European Policy Studies.
- Bramma, Keith M., 2000. "Pricing farm loans for credit risk," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123607, Australian Agricultural and Resource Economics Society.
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