IDEAS home Printed from https://ideas.repec.org/a/ags/wjagec/32463.html
   My bibliography  Save this article

Stochastic Dynamic Modeling: An Aid To Agricultural Lender Decision Making

Author

Listed:
  • Gustafson, Cole R.

Abstract

Factors affecting a lender's decision to grant farmers operating credit in North Dakota are quantified in an intertemporal loan profitability model using stochastic dynamic programming. Experimental data obtained from a panel of lenders demonstrates the sensitivity of an optimal policy to changes in a lender's discount rate, a borrower's repayment status, and patronage. The value of credit scoring models that appraise a borrower's credit worthiness also is determined.

Suggested Citation

  • Gustafson, Cole R., 1989. "Stochastic Dynamic Modeling: An Aid To Agricultural Lender Decision Making," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(1), pages 1-9, July.
    • Handle: RePEc:ags:wjagec:32463
    DOI: 10.22004/ag.econ.32463
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/32463/files/14010157.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.32463?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
    ---><---

    References listed on IDEAS

    as
    1. C. Robert Taylor & Oscar R. Burt, 1984. "Near-Optimal Management Strategies for Controlling Wild Oats in Spring Wheat," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(1), pages 50-60.
    2. Gustafson, Cole R. & Barry, Peter J. & Sonka, Steven T., 1988. "Machinery Investment Decisions: A Simulated Analysis For Cash Grain Farms," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(2), pages 1-10, December.
    3. Harold Bierman, Jr. & Warren H. Hausman, 1970. "The Credit Granting Decision," Management Science, INFORMS, vol. 16(8), pages 519-532, April.
    4. Leistritz, F. Larry & Hardie, Wallace C. & Ekstrom, Brenda L. & Leholm, Arlen G. & Vreugdenhil, Harvey G., 1987. "Financial, Managerial, and Attitudinal Characteristics of North Dakota Farm Families: Results of the 1986 Farm Survey," Agricultural Economics Reports 23205, North Dakota State University, Department of Agribusiness and Applied Economics.
    5. Saxowsky, David M. & Gustafson, Cole R. & Ali, Mir B. & Braaten, Joan M. & Rotering, Jeff, 1987. "Economic Impact of North Dakota Laws that Permit Delayed or Partial Repayment of Agricultural Debt - July 1, 1986," Agricultural Economics Reports 23462, North Dakota State University, Department of Agribusiness and Applied Economics.
    6. Arrow, Kenneth J, 1982. "Risk Perception in Psychology and Economics," Economic Inquiry, Western Economic Association International, vol. 20(1), pages 1-9, January.
    7. Simon, Herbert A., 1984. "On the behavioral and rational foundations of economic dynamics," Journal of Economic Behavior & Organization, Elsevier, vol. 5(1), pages 35-55, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. 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.
    2. Mjelde, James W. & Harris, Wesley D. & Conner, J. Richard & Schnitkey, Gary D. & Glover, Michael K. & Garoian, Lee, 1992. "Existence Of Unique Limiting Probability Vectors In Stochastic Processes With Multiple Transition Matrices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(2), pages 1-11, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jonathan K. Budd & Peter G. Taylor, 2015. "Calculating optimal limits for transacting credit card customers," Papers 1506.05376, arXiv.org, revised Aug 2015.
    2. Timothy J. Lowe & Paul V. Preckel, 2004. "Decision Technologies for Agribusiness Problems: A Brief Review of Selected Literature and a Call for Research," Manufacturing & Service Operations Management, INFORMS, vol. 6(3), pages 201-208.
    3. Robert S. Chirinko & Edward P. Harper, 1993. "Buckle up or slow down? New estimates of offsetting behavior and their implications for automobile safety regulation," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(2), pages 270-296.
    4. David J. Pannell, 1991. "Pests and pesticides, risk and risk aversion," Agricultural Economics, International Association of Agricultural Economists, vol. 5(4), pages 361-383, August.
    5. Mortensen, Timothy L. & Leistritz, F. Larry & Ekstrom, Brenda L. & Wanzek, Janet K., 1989. "Facing Economic Adversity: Experiences of Displaced Farm Families in North Dakota," Agricultural Economics Reports 23319, North Dakota State University, Department of Agribusiness and Applied Economics.
    6. Atanasov, Pavel & Witkowski, Jens & Ungar, Lyle & Mellers, Barbara & Tetlock, Philip, 2020. "Small steps to accuracy: Incremental belief updaters are better forecasters," Organizational Behavior and Human Decision Processes, Elsevier, vol. 160(C), pages 19-35.
    7. Gold, Natalie & List, Christian, 2004. "Framing as Path Dependence," Economics and Philosophy, Cambridge University Press, vol. 20(2), pages 253-277, October.
    8. Yochanan Shachmurove, 2012. "Failing Institutions Are at the Core of the U.S. Financial Crisis," PIER Working Paper Archive 12-040, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    9. Wärneryd, K.E., 1995. "Demystifying rational expectations theory through an economic-psychological model," Discussion Paper 1995-92, Tilburg University, Center for Economic Research.
    10. Robin Pope & Reinhard Selten & Johannes Kaiser & Sebastian Kube & Jürgen Hagen, 2012. "Exchange rate determination: a theory of the decisive role of central bank cooperation and conflict," International Economics and Economic Policy, Springer, vol. 9(1), pages 13-51, March.
    11. Ganguly, Ananda R & Kagel, John H & Moser, Donald V, 2000. "Do Asset Market Prices Reflect Traders' Judgment Biases?," Journal of Risk and Uncertainty, Springer, vol. 20(3), pages 219-245, May.
    12. Rudiger Dornbusch & Jeffrey Frankel, 1988. "The Flexible Exchange Rate System: Experience and Alternatives," International Economic Association Series, in: Silvio Borner (ed.), International Finance and Trade in a Polycentric World, chapter 7, pages 151-208, Palgrave Macmillan.
    13. Lajili, Kaouthar & Barry, Peter J. & Sonka, Steven T. & Mahoney, Joseph T., 1997. "Farmers' Preferences For Crop Contracts," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(2), pages 1-17, December.
    14. Edgardo Bucciarelli & Nicola Mattoscio, 2021. "Reconsidering Herbert A. Simon’s Major Themes in Economics: Towards an Experimentally Grounded Capital Structure Theory Drawing from His Methodological Conjectures," Computational Economics, Springer;Society for Computational Economics, vol. 57(3), pages 799-823, March.
    15. Voltaire, Louinord & Donfouet, Hermann Pythagore Pierre & Pirrone, Claudio & Larzillière, Agathe, 2017. "Respondent Uncertainty and Ordering Effect on Willingness to Pay for Salt Marsh Conservation in the Brest Roadstead (France)," Ecological Economics, Elsevier, vol. 137(C), pages 47-55.
    16. Williamson, Oliver E., 2010. "Transaction Cost Economics: The Natural Progression," Journal of Retailing, Elsevier, vol. 86(3), pages 215-226.
    17. Clara Delavallade, 2017. "Quality Health Care and Willingness to Pay for Health Insurance Retention: A Randomized Experiment in Kolkata Slums," Health Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 619-638, May.
    18. Maximilian-Benedikt Herwarth Kohn & Pedro L. Valls Pereira, 2017. "Speculative bubbles and contagion: Analysis of volatility’s clusters during the DotCom bubble based on the dynamic conditional correlation model," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1411453-141, January.
    19. Gneezy, U., 1996. "Probability Judgements in Multi-Stage Problems : Experimental Evidence of Systematic Biases," Discussion Paper 1996-01, Tilburg University, Center for Economic Research.
    20. Just, David R. & Wansink, Brian & Turvey, Calum G., 2009. "Biosecurity, Terrorism, and Food Consumption Behavior: Using Experimental Psychology to Analyze Choices Involving Fear," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), pages 1-18, April.

    More about this item

    Keywords

    Agricultural Finance;

    Statistics

    Access and download statistics

    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:ags:wjagec:32463. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/waeaaea.html .

    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.