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A Comparison Of Non-Price Terms Of Lending For Small Business And Farm Loans

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  • Raymond Posey
  • Alan K. Reichert

Abstract

This study examines differences in terms of lending for small loans among non-farm commercial banks and farm lenders of different sizes. Large farm lenders more frequently require collateral than large commercial banks, while small farm lenders require collateral less frequently than small commercial banks. In addition, there is evidence that small commercial banks require collateral more frequently than large commercial banks. There is no difference in the frequency of collateral use among farm lenders, regardless of size. The type of the collateral used, real estate vs. non-real estate, is also affected by the term of the loan for farm lenders. The longer the term of the loan, the more frequently real estate is used as collateral.

Suggested Citation

  • Raymond Posey & Alan K. Reichert, 2011. "A Comparison Of Non-Price Terms Of Lending For Small Business And Farm Loans," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 5(2), pages 45-59.
    • Handle: RePEc:ibf:ijbfre:v:5:y:2011:i:2:p:45-59
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    References listed on IDEAS

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    Cited by:

    1. Niinimäki, Juha-Pekka, 2015. "The optimal allocation of alternative collateral assets between different loans," The North American Journal of Economics and Finance, Elsevier, vol. 34(C), pages 22-41.

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    More about this item

    Keywords

    farm lending; role of collateral; terms of lending;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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