IDEAS home Printed from https://ideas.repec.org/p/ags/aaea06/21431.html
   My bibliography  Save this paper

Credit Scoring Models: A Comparison between Crop and Livestock Farms

Author

Listed:
  • Durguner, Seda
  • Barry, Peter J.
  • Katchova, Ani L.

Abstract

This paper uses FBFM (Illinois Farm Business Farm Management Association) data to analyze several key factors in the decision to categorize borrowers into acceptable or problematic and to classify borrowers across five classes. Net worth does not play significant role in the decision process for livestock farms, whereas it is significantly important for crop farms. For livestock farms, tenure ratio is not significant across classes and is generally not significant across categories depending on the cut off point used to describe acceptable or problematic borrower. However, it is significant for crop farms. Working capital to gross farm return, return on farm assets, and asset turnover ratio are all significant for both farm types. The operating expense to gross farm return is not an independent variable for livestock farms whereas an independent and significant variable for crop farms.

Suggested Citation

  • Durguner, Seda & Barry, Peter J. & Katchova, Ani L., 2006. "Credit Scoring Models: A Comparison between Crop and Livestock Farms," 2006 Annual meeting, July 23-26, Long Beach, CA 21431, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea06:21431
    DOI: 10.22004/ag.econ.21431
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/21431/files/sp06du04.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.21431?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Govindaray N. Nayak & Calum G. Turvey, 1997. "Credit Risk Assessment and the Opportunity Costs of Loan Misclassification," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 45(3), pages 285-299, November.
    2. Allen M. Featherstone & Laura M. Roessler & Peter J. Barry, 2006. "Determining the Probability of Default and Risk-Rating Class for Loans in the Seventh Farm Credit District Portfolio," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(1), pages 4-23.
    3. Jill M. Phillips & Ani L. Katchova, 2004. "Credit score migration analysis of farm businesses: conditioning on business cycles and migration trends," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 64(1), pages 1-15, May.
    4. Escalante, Cesar L. & Barry, Peter J. & Park, Timothy A. & Demir, Ebru, 2004. "Farm-Level And Macroeconomic Determinants Of Farm Credit Migration Rates," 2004 Annual meeting, August 1-4, Denver, CO 20227, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Stephanou, Constantinos & Mendoza, Juan Carlos, 2005. "Credit risk measurement under Basel II : an overview and implementation issues for developing countries," Policy Research Working Paper Series 3556, The World Bank.
    6. Ani L. Katchova & Peter J. Barry, 2005. "Credit Risk Models and Agricultural Lending," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 194-205.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Quaye, Frederick & Hartarska, Valentina & Nadolnyak, Denis, 2015. "Farmer Credit Delinquency in Southeastern US: Factors and Behavior Prediction," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196914, Southern Agricultural Economics Association.
    2. Pederson, Glenn D. & Chu, Yu-Szu & Richardson, D. Wynn, 2011. "Community Bank Assessment of Agricultural Portfolio Risk Exposure: The Literature and the Methods in Use," Staff Papers 107483, University of Minnesota, Department of Applied Economics.
    3. Katchova, Ani L. & Nam, Sangjeong, 2005. "Credit Risk Migration Analysis Focused on Farm Business Characteristics and Business Cycles," 2005 Annual meeting, July 24-27, Providence, RI 19451, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Dressler, Jonathan B. & Stokes, Jeffrey R., 2006. "Mortgage Termination at AgChoice Farm Credit," 2006 Agricultural and Rural Finance Markets in Transition, October 2-3, 2006, Washington, DC 133077, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    5. Amelie Jouault & Allen M. Featherstone, 2011. "Determining the Probability of Default of Agricultural Loans in a French Bank," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 1(1), pages 1-1.
    6. Frederick Murdoch Quaye & Denis Nadolnyak & Valentina Hartarska, 2017. "Factors Affecting Farm Loan Delinquency in the Southeast," Research in Applied Economics, Macrothink Institute, vol. 9(4), pages 75-92, December.
    7. Gunderson, Michael A. & Gloy, Brent A. & LaDue, Eddy L., 2005. "Pricing Agricultural Loans to Account for Long-Term Default Risk," 2005 Agricultural and Rural Finance Markets in Transition, October 3-4, 2005, Minneapolis, Minnesota 132750, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    8. Odeh, Oluwarotimi O. & Featherstone, Allen M. & Sanjoy, Das, 2006. "Predicting Credit Default in an Agricultural Bank: Methods and Issues," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35359, Southern Agricultural Economics Association.
    9. Boratyńska, Katarzyna & Grzegorzewska, Emilia, 2018. "Bankruptcy prediction in the agribusiness sector: Lessons from quantitative and qualitative approaches," Journal of Business Research, Elsevier, vol. 89(C), pages 175-181.
    10. Subedi, Dipak & Giri, Anil K., 2024. "Debt Use by U.S. Farm Businesses, 2012–2021," Economic Information Bulletin 344131, United States Department of Agriculture, Economic Research Service.
    11. Alicia García-Herrero & Sergio Gavilá, 2006. "Posible impacto de Basilea II en los países emergentes," Boletín, CEMLA, vol. 0(3), pages 103-124, Julio-sep.
    12. Erickson, Kenneth W. & Featherstone, Allen M. & Subedi, Dipak & Nehring, Richard F. & Harris, James Michael, 2017. "How Fluctuations in Farm and Off-Farm Income Could Affect the Financial Performance of U.S. Farm Operator Dairy Farms: A Farm-level Analysis," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258488, Agricultural and Applied Economics Association.
    13. Francisco Ascui & Theodor F. Cojoianu, 2019. "Implementing natural capital credit risk assessment in agricultural lending," Business Strategy and the Environment, Wiley Blackwell, vol. 28(6), pages 1234-1249, September.
    14. Bolzico, Javier & Mascaro, Yira & Granata, Paola, 2007. "Practical guidelines for effective bank resolution," Policy Research Working Paper Series 4389, The World Bank.
    15. repec:ags:ijag24:344526 is not listed on IDEAS
    16. Étienne Farvaque & Catherine Refait-Alexandre, 2016. "Les exigences de transparence des accords de Bâle : aubaine ou fardeau pour les pays en développement ?," Mondes en développement, De Boeck Université, vol. 0(1), pages 131-147.
    17. Jarko Fidrmuc & Pavel Ciaian & d'Artis Kancs & Jan Pokrivcak, 2013. "Credit Constraints, Heterogeneous Firms and Loan Defaults," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 53-68, May.
    18. Geoffroy Enjolras & Philippe Madiès, 2019. "The determinants of loan acceptance: a case study of French farms," Economics Bulletin, AccessEcon, vol. 39(1), pages 358-371.
    19. Ali, Syed Babar, 2012. "Quality of Internal Risk Rating Frameworks at Commercial Banks in Pakistan," MPRA Paper 55117, University Library of Munich, Germany.
    20. Jonathan B. Dressler & Jeffrey R. Stokes, 2010. "Survival analysis and mortgage termination at AgChoice ACA," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(1), pages 21-36, May.
    21. Erol Muzir, 2013. "Impact of Placement Choices and Governance Issues on Credit Risk in Banking: Nonparametric Evidence from an Emerging Market," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(4), pages 1-6, August.

    More about this item

    Keywords

    Financial Economics;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea06:21431. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.