CREDIT SCORING, LOAN PRICING, AND FARM BUSINESS PERFORMANCE

In 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 firm’s investment, financing, and debt servicing activities. Moreover, the lender’s price responses dampen growth incentives as credit worthiness diminished, stimulate growth as credit improves, and lead to similar capital structures over time.


Issue Date:
1989-07
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/32464
Published in:
Western Journal of Agricultural Economics, Volume 14, Number 1
Page range:
45-55
Total Pages:
11




 Record created 2017-04-01, last modified 2017-04-04

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