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Impacts Of Chapter 12 And Lender Liability Suits On Bankers' Propensity To Lend In Western Arkansas

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  • Dixon, Bruce L.
  • Raub, Kristin M.
  • Flaccus, Janet A.

Abstract

The recent availability of Chapter 12 bankruptcy and the more frequent use of lender liability suits by borrowers are factors that may be adversely affecting the supply of agricultural loans. An experiment using hypothetical loan applications was undertaken involving 34 banks in western Arkansas. Responses were used to estimate the impacts of these legal procedures on banks' lending behavior. The estimated models indicate Chapter 12 is not a significant factor in the loan approval process. Lender liability has marginal significance in lowering the probability of granting an intermediate term loan.

Suggested Citation

  • Dixon, Bruce L. & Raub, Kristin M. & Flaccus, Janet A., 1993. "Impacts Of Chapter 12 And Lender Liability Suits On Bankers' Propensity To Lend In Western Arkansas," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 25(1), pages 1-13, July.
    • Handle: RePEc:ags:joaaec:15215
    DOI: 10.22004/ag.econ.15215
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    References listed on IDEAS

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    1. Solemsaas, Peter J. & Gustafson, Cole R., 1989. "Lender Liability: Nature, Extent, and Economic Impact of Agriculturally Related Claims in North Dakota," Staff Papers 121751, North Dakota State University, Department of Agribusiness and Applied Economics.
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    Cited by:

    1. Hippen, Scott Lew, 1995. "The economic and legal efficacy of chapter 12 bankruptcy," ISU General Staff Papers 1995010108000017613, Iowa State University, Department of Economics.

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      Keywords

      Agricultural Finance; Financial Economics;

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