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The Agricultural Lending Decision: A Multiattribute Analysis

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  • Stover, Roger D.
  • Teas, R. Kenneth
  • Gardner, Roy J.

Abstract

The role of commercial bank lending in financing the farm production sector is an issue of growing importance. During the past several years, farm operators have become more capital intensive, thus requiring more loans to fund not only seasonal plantings but also capital expansion. While one area of research (Linsj Penson; Hesser 'and Schuh) has focused on the determinants of aggregate loan demand, subsequent work (Boehlje and Fisherj Boehlje, Harris and Hoskins) has concentrated on such demand in local financial markets. Despite this re search on financial market behavior, relatively little has been done to model and empirically test the decision process of individual lending officers in this market. Existing studies (i.e., Barry, Baker, and Sanint; Sonka, Dixon, and Jones).have concentrated primarily on.credit analysis of farm firms. The objective of this paper is to expand on existing research by incorporating the inter acting effects of credit considerations, market conditions, collateral and pricing into the decision process of the individual loan officer when faced with an array of farm loan situations.

Suggested Citation

  • Stover, Roger D. & Teas, R. Kenneth & Gardner, Roy J., 1981. "The Agricultural Lending Decision: A Multiattribute Analysis," ISU General Staff Papers 198101010800001128, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:198101010800001128
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    Cited by:

    1. Amelie Jouault & Allen M. Featherstone, 2011. "Determining the Probability of Default of Agricultural Loans in a French Bank," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 1(1), pages 1-1.
    2. Escalante, Cesar L. & Brooks, Rodney L. & Epperson, James E. & Stegelin, Forrest E., 2006. "Credit Risk Assessment and Racial Minority Lending at the Farm Service Agency," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(1), pages 1-15, April.
    3. Otima, Ruth M. A., 1994. "Predicting loan repayment performance: a case of Kenyan farm borrowers," ISU General Staff Papers 1994010108000018175, Iowa State University, Department of Economics.
    4. Tseng, Jauling, 1996. "Farmer-borrowers' selection of short- and intermediate-term loan contracts: traditional lenders versus nontraditional lenders," ISU General Staff Papers 1996010108000012129, Iowa State University, Department of Economics.
    5. Sonka, Steven T. & Khoju, Madhab R., 1989. "Empirical Studies Of Firm Viability, Profitability, And Growth," 1989 Conference, January 7-10, Tucson, Arizona 260159, Regional Research Committe NC-181: Determinants of Farm Size and Structure.

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