Document Type

Report

Publication Date

1981

Number

130

Abstract

The role of commercial bank lending in financing the farm production sector is an issue of growing importance. During the past several years, farm operators have become more capital intensive, thus requiring more loans to fund not only seasonal plantings but also capital expansion. While one area of research (Linsj Penson; Hesser 'and Schuh) has focused on the determinants of aggregate loan demand, subsequent work (Boehlje and Fisherj Boehlje, Harris and Hoskins) has concentrated on such demand in local financial markets. Despite this re search on financial market behavior, relatively little has been done to model and empirically test the decision process of individual lending officers in this market. Existing studies (i.e., Barry, Baker, and Sanint; Sonka, Dixon, and Jones).have concentrated primarily on.credit analysis of farm firms. The objective of this paper is to expand on existing research by incorporating the inter acting effects of credit considerations, market conditions, collateral and pricing into the decision process of the individual loan officer when faced with an array of farm loan situations.

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