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A decomposition approach to analysing racial and gender biases in Farm Service Agency's lending decisions

Author

Listed:
  • Ya Wu
  • Cesar L. Escalante
  • Lewell F. Gunter
  • James E. Epperson

Abstract

This study provides a different perspective in revisiting the racial and gender discrimination issue at the Farm Service Agency (FSA). Employing the Oaxaca--Blinder decomposition method, this study analyses disparities in approved loan amounts among racial and gender classes of borrowers. This study's results indicate substantial differentials in approved loan amount gaps between racial and gender classes, favouring white and female borrowers, respectively. Further scrutiny of the borrowers’ comparative financial conditions presented to FSA to support their loan applications, however, indicate that these borrower groups significantly dominate their peers in a number of measures that indicate their financial strengths and relatively greater capability to repay their future lending obligations. Hence, this study's results can hardly be construed as evidence of biased lending decisions as these borrower groups should rightfully be offered more favourable loan terms, such as larger loan amounts, by the FSA.

Suggested Citation

  • Ya Wu & Cesar L. Escalante & Lewell F. Gunter & James E. Epperson, 2012. "A decomposition approach to analysing racial and gender biases in Farm Service Agency's lending decisions," Applied Economics, Taylor & Francis Journals, vol. 44(22), pages 2841-2850, August.
    • Handle: RePEc:taf:applec:44:y:2012:i:22:p:2841-2850
    DOI: 10.1080/00036846.2011.566210
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    Cited by:

    1. Ashok K. Mishra & Gianna Short & Charles B. Dodson, 2024. "Racial disparities in farm loan application processing: Are Black farmers disadvantaged?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(1), pages 111-136, March.
    2. Waymon R. Hinson, 2018. "Land Gains, Land Losses: The Odyssey of African Americans Since Reconstruction," American Journal of Economics and Sociology, Wiley Blackwell, vol. 77(3-4), pages 893-939, May.
    3. Jennifer A. Ball, 2020. "Women farmers in developed countries: a literature review," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 37(1), pages 147-160, March.
    4. Hartarska, Valentina M. & Adjei, Eugene & Nadolnyak, Denis A., 2024. "The Transition Incentive Program and Women Farmers in the USA," 2024 Annual Meeting, July 28-30, New Orleans, LA 343767, Agricultural and Applied Economics Association.
    5. Tia M. McDonald & Ron Durst, 2024. "An analysis of tax benefits by race and ethnicity for farm households," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(2), pages 677-697, June.

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