IDEAS home Printed from https://ideas.repec.org/a/eme/afrpps/v75y2015i4p484-498.html
   My bibliography  Save this article

Modeling the impact of distance between offices and borrowers on agricultural loan volume

Author

Listed:
  • Taylor Witte
  • Eric A DeVuyst
  • Brian Whitacre
  • Rodney Jones

Abstract

Purpose - – Farm Credit is a major provider of credit to agricultural producers in Oklahoma and nationally. The decision to place a new Farm Credit office reduces borrower search and travel costs and should increase loan volume. The purpose of this paper is to model the new loan volume as function of distance from east central Oklahoma county centroids to Farm Credit offices. The model is then used to predict the impact of placing new offices in underserved areas. Design/methodology/approach - – County aggregate new loan volume is regressed on distances to Farm Credit branch and field offices and other variables expected to impact agricultural loan volume. The estimated model is used to predict new loan volume impact of adding additional branch and field offices in counties that did not have these offices. Confidence intervals are used to measure the significance of predicted loan volumes. Findings - – Distances from county centroids to both branch and field offices were found to significantly reduce new loan volume. The results were used to simulate the addition of new branch and field offices. The simulation predicted the added annual new loan volume associated with office additions. Practical implications - – Using spatial models, Farm Credit of east central Oklahoma and other agricultural lenders can better plan for expansion (or consolidation). These models indicate counties where annual new loan volume will likely be higher (or lower for consolidation) than other nearby counties. The result can be improved borrower access and system financial performance. Originality/value - – While spatial modeling has been utilized in other sectors, little has been done relative to agricultural credit access and impact on loan volume. The model here explicitly models the impact that distance to Farm Credit offices have on annual new loan volume.

Suggested Citation

  • Taylor Witte & Eric A DeVuyst & Brian Whitacre & Rodney Jones, 2015. "Modeling the impact of distance between offices and borrowers on agricultural loan volume," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 75(4), pages 484-498, November.
    • Handle: RePEc:eme:afrpps:v:75:y:2015:i:4:p:484-498
    DOI: 10.1108/AFR-01-2015-0005
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/AFR-01-2015-0005/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/AFR-01-2015-0005/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/AFR-01-2015-0005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Le , Khuong Ninh & Cao , Van Hon, 2023. "Geographical Distance and Access to Bank Credit of Vietnamese Farmers," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 48(1), pages 111-128, March.
    2. Hanson, Erik D., 2021. "Consolidation in the Farm Credit System: The Case of AgCountry and United," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 2(6), January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:afrpps:v:75:y:2015:i:4:p:484-498. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.