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Agricultural Loan Officers' Roles In Cooperative Investment In North Dakota

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  • Wilson, Brooks M.
  • Cobia, David W.

Abstract

We surveyed agricultural loan officers and their supervisors in North Dakota to learn what factors influenced the decision to make loans to farmers investing in new agricultural cooperatives. We found that the Farm Credit Services and other large institutions made a disproportionately large share of the loans. Furthermore, institutions with minimal equity, but with low levels of non-current loans and a high return on equity, were more likely than others to make the loans. Experienced agricultural loan officers and those who attended a cooperative's information meeting or reviewed the business plan were more likely to make loans. Loan officers granted loans to applicants who met conservative lending criteria. The decision was not based on the loan officer's attitudes toward cooperatives. Attitudes of loan officers toward cooperatives were generally positive. Most negative attitudes were expressed about the price of the stock, and the delivery contracts required by the cooperatives. Finally, loan officers believed cooperative stock was a risky investment, inferior to stock and mutual funds as stand alone investments.

Suggested Citation

  • Wilson, Brooks M. & Cobia, David W., 1996. "Agricultural Loan Officers' Roles In Cooperative Investment In North Dakota," Agricultural Economics Reports 23207, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddaer:23207
    DOI: 10.22004/ag.econ.23207
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    1. Charles W. Calomiris & R. Glenn Hubbard & James H. Stock, 1986. "Growing in Debt: The 'Farm Crisis' and Public Policy," NBER Working Papers 2085, National Bureau of Economic Research, Inc.
    2. Charles W. Calomiris & R. Glenn Hubbard & James H. Stock, 1986. "The Farm Debt Crisis and Public Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(2), pages 441-486.
    3. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    4. Leistritz, F. Larry, 1995. "Potential Local Socioeconomic Impacts of the Proposed ProGold Processing Plant," Agricultural Economics Reports 23190, North Dakota State University, Department of Agribusiness and Applied Economics.
    5. Gustafson, Cole R. & Beyer, Ronald J. & Saxowsky, David M., 1991. "Credit Evaluation: Investigating the Decision Process of Agricultural Loan Officers," 1991 Regional Committee NC-161, September 23-24, 1991, St. Louis, Missouri 130940, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
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    Cited by:

    1. Cobia, David W., 1990. "New Generation Cooperatives: External Environment and Investor Characteristics," Cooperatives: Their Importance in the Future Food and Agricultural System - FAMC 1990 Conference 265911, Food and Agricultural Marketing Consortium (FAMC).

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    Keywords

    Agricultural Finance; Agribusiness;

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