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The Profitability Of Agricultural Loans By Commercial Banks

Author

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  • LaDue, Eddy L.
  • Moss, Jerry L.
  • Smith, Robert S.

Abstract

Data collected from a sample of New York banks were used to assess factors expected to influence the profitability of the various loan programs of commercial banks. Loan loss and loan service costs were lower for farm loans than for either installment or commercial loans. Although not required to maintain compensating balances, farmer time and demand deposits represented 23 percent of outstanding loan balances. The high rate of turnover on farm mortgage loans resulted in an average loan repayment period of 6.2 years, only 40 percent of the original financing period. Lower farm loan costs indicate that banks could charge 3/4 percent lower interest on farm loans than commercial loans.

Suggested Citation

  • LaDue, Eddy L. & Moss, Jerry L. & Smith, Robert S., 1978. "The Profitability Of Agricultural Loans By Commercial Banks," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 7(1), pages 1-5, April.
    • Handle: RePEc:ags:nareaj:159049
    DOI: 10.22004/ag.econ.159049
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    Cited by:

    1. Pederson, Glenn D. & Duncan, Douglas G., 1983. "Performance Pricing of Farm Loans Under Risk: Methods and Implementation," Agricultural Economics Reports 23410, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Schmiesing, Brian H. & Edelman, Mark A. & Swinson, Cindy & Kolmer, Diane, 1985. "Differential Pricing Of Agricultural Operating Loans By Commercial Banks," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 10(2), pages 1-12, December.

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    Keywords

    Agricultural Finance; Financial Economics;

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