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An Analysis of Factors that Affect the Quality of Federal Land Bank Loans

Published online by Cambridge University Press:  05 September 2016

William E. Hardy Jr. ,
Stanley R. Spurlock ,
Donnie R. Parrish  and
Lee A. Benoist
William E. Hardy Jr.
Affiliation:
Department of Agricultural Economics and Rural Sociology, Alabama Agricultural Experiment Station, Auburn University
Stanley R. Spurlock
Affiliation:
Department of Agricultural Economics, Mississippi Agricultural Experiment Station, Mississippi State University
Donnie R. Parrish
Affiliation:
Alabama Cooperative Extension Service
Lee A. Benoist
Affiliation:
Federal Land Bank of Jackson
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Abstract

Financial conditions existing in agriculture are placing severe pressure on lenders as well as borrowers. Data from both good and foreclosed Federal Land Bank loans were analyzed to determine the most important characteristics leading to the failure of loans. The analysis was completed by comparing means through t-tests and the development of a discriminant model. The ratio of total debt service to total income, the debt to asset ratio, the ratio of total loan amount to appraised value, and the ratio of acres in security to acres owned were determined to be the most important discriminating variables.

Keywords

financial analysiscredit scoringdiscriminant analysisloan evaluation
Type
Submitted Articles
Information
Journal of Agricultural and Applied Economics , Volume 19 , Issue 2 , December 1987 , pp. 175 - 182
Copyright
Copyright © Southern Agricultural Economics Association 1987

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