Factors Affecting Repayment Capacity of Borrower Farmers: An Analysis

Singh, Sukhpal

doi:10.5958/0976-4666.2017.00067.5

Cited by 1 publication

(2 citation statements)

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“…Several factors may affect farm loan repayment rates. Previous studies have shown that economic conditions at the regional and farm level can affect farm loan repayment rates (Oladeebo and Oladeebo 2008;Quaye, Nadolnyak, and Hatarska 2017;Singh 2017). Both farm income and nonfarm income significantly affect farmers' ability to repay loans.…”

Section: Modeling Stress In Agricultural Lendingmentioning

confidence: 99%

“…Stress in agricultural lending has been measured in several different ways. The most common measures of stress in agricultural lending are loan repayment rates, loan delinquency rates, and loan defaults (Escalante, Song, and Dodson 2016;Featherstone, Roessler, and Barry 2006;Kim 2005;Oladeebo and Oladeebo 2008;Quaye, Nadolnyak, and Hatarska 2017;Singh 2017). Loan repayment rates track the pace at which borrowers repay loans, taking into account both the timing and amount of payments.…”

Section: Measuring Stress In Agricultural Lendingmentioning

confidence: 99%

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Mapping Stress in Agricultural Lending

Cowley¹

2018

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epayment rates for farm loans have declined every quarter since the second quarter of 2013, suggesting heightened stress in agricultural lending. This stress could be amplified if the outlook for the agricultural sector remains downbeat. Farm income is expected to remain low in the coming years, and farm sector liquidity continues to deteriorate. If lower agricultural commodity prices and farm incomes persist, bankers will need to understand how regional and agricultural economic conditions-such as annual changes in crop revenues, offfarm income, and farm production expenses-affect farm loan repayment rates and contribute to stress in agricultural lending. Declining loan repayment rates may lead to adverse outcomes for both banks and borrowers. When farm borrowers are unable to service short-term debt obligations, their ability to obtain financing decreases. In addition, if stress in agricultural lending intensifies, agricultural banks could become less able to lend to creditworthy farm borrowers. Farming operations require considerable funding to start, function, and grow. Many farmers borrow funds from agricultural banks to purchase land, farm machinery, livestock, and production inputs such as seed, fertilizer, and fuel. Often, these purchases spill over into local, rural economies. Therefore, when repayment rates decline and agricultural lenders are less able to lend to farmers, local economies and the general agricultural sector may experience worse outcomes.

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Section: Modeling Stress In Agricultural Lendingmentioning

confidence: 99%