A Survival Analysis of Public Guaranteed Loans: Does Financial Intermediary Matter?

2021 ◽  
pp. 100880
Author(s):  
Stefano Caselli ◽  
Guido Corbetta ◽  
Doriana Cucinelli ◽  
Monica Rossolini
Keyword(s):  
Survival Analysis ◽  
Financial Intermediary ◽  
Guaranteed Loans

Farm and lender structural change: implications for federal credit

2017 ◽  
Vol 77 (1) ◽  
pp. 78-94 ◽  
Author(s):  
Charles B. Dodson ◽  
Bruce L. Ahrendsen
Keyword(s):  
Land Tenure ◽  
Commodity Price ◽  
Farm Size ◽  
Farm Income ◽  
Service Agency ◽  
Credit System ◽  
Content Type ◽  
Farm Credit ◽  
Size Groups ◽  
Guaranteed Loans

Purpose The purpose of this paper is to examine changes in the structures of US farms and lenders and identify prospective implications for federal credit. Design/methodology/approach Data from US farm operations for 1996-2014 were adjusted to 2014 values using commodity price indices. Farm size groups were constructed by value of farm production to analyze changes in farm numbers, production, assets, debt, leverage, liquidity, profitability, land tenure, commodity type, contract production, organization type, and use of Farm Service Agency (FSA) direct and guaranteed loans by farm size. Bank, Farm Credit System (FCS), and FSA data from 1996 to 2015 were adjusted to 2014 values. Lender size groups were constructed to analyze changes in bank and association numbers, farm loans, and use of FSA guaranteed loans by lender size. Findings The greatest consolidation has been by farms with over $2 million in production. More farm debt is held by large, complex organizations, frequently with multiple operators, more variable income, and greater reliance on production contracts and operating and nonreal estate credit. Large farms have greater leverage, are more profitable, and have a larger share of household income from the farm. Banks and FCS institutions are fewer and larger, yet smaller institutions use FSA guarantees to a greater extent. Larger farms tend to be more reliant on both direct and guaranteed FSA loans and are likely to become more dependent on FSA credit. Originality/value Changing farm and lender structure together with softening farm income may require FSA farm loan program changes to meet any increase in loan demand. Policy alternatives are provided to meet changing demand for farm credit.

Recent Trends in National Finance

1938 ◽  
Vol 5 (02) ◽  
pp. 81-106
Author(s):  
H. W. Haycocks
Keyword(s):  
Economic System ◽  
Labour Market ◽  
Large Scale ◽  
Economic Life ◽  
Stationary Population ◽  
Distant Future ◽  
True Value ◽  
The Social ◽  
Recent Trends ◽  
Guaranteed Loans

In any discussion on recent trends in national finance the most important feature to note is that the State is being called upon more and more to redress the balance in the social and economic system. This tendency shows itself in the introduction of quotas, subsidies, Government-guaranteed loans to industry, health and unemployment policies, etc., and can, of course, be traced back to the nineteenth century. During the last few years, however, some of the changes have been so rapid that it is not yet possible to appraise their true value, and it seems likely that in the not too distant future private enterprise will cease to be the dominant force in the economic life of this country, whatever may be the party labels of successive Governments. Apart from forces at present operating, the coming task of adjusting the economic system to a falling or even stationary population will certainly require Government assistance on a large scale, especially in the labour market if much unemployment is to be avoided.

Modeling duration of FSA operating and farm ownership loan guarantees

2016 ◽  
Vol 76 (4) ◽  
pp. 426-444
Author(s):  
Deng Long ◽  
Bruce L. Ahrendsen ◽  
Bruce L. Dixon ◽  
Charles B. Dodson
Keyword(s):  
Proportional Hazards ◽  
Cox Proportional Hazards ◽  
Service Agency ◽  
Content Type ◽  
Macroeconomic Conditions ◽  
Cox Proportional Hazards Models ◽  
Loan Guarantees ◽  
Feasible Outcome ◽  
Farm Ownership ◽  
Guaranteed Loans

Purpose The purpose of this paper is to identify determinants of feasible outcome events (expired with no loss, settled for loss, still performing) and time to event of Farm Service Agency (FSA) operating and farm ownership (FO) loan guarantees. Design/methodology/approach Data on 19,126 FSA guaranteed loans, which were made by various lenders to farmers who have limited ability to obtain loans from normal sources without the Federal guarantee, were collected. Cox proportional hazards models for operating loans (OLs) and FO loans are estimated to identify borrower characteristics, loan characteristics, lender types, and farm and macroeconomic environment factors that influence guarantee outcomes. Findings Loans with different characteristics (loan amount, loan term, lender type, region originated) and assistance programs (Beginning Farmer, Interest Assistance) have differing guarantee outcomes. Contemporaneous variables, in particular delinquency status, have a significant impact on guarantee outcomes. Research limitations/implications All loans were originated in calendar years 2004 and 2005. Since FO loans may have as long as 40 year terms, results are not as robust for FO loans as for OLs. Practical implications Different loan characteristics and macroeconomic conditions significantly influence the occurrence of possible guarantee outcomes and time to the outcomes. Originality/value Guaranteed loans are the primary method of government credit assistance to US farm operators. Data on individual borrowers have been difficult to obtain for much of the life of the guaranteed program because loan applications are held privately. This study provides insight on how various factors drive guarantee performance which is useful to policy makers trying to increase guaranteed loan program efficiency.

Bank size, lending paradigms, and usage of Farm Service Agency's guaranteed loan programs

2014 ◽  
Vol 74 (1) ◽  
pp. 133-152 ◽  
Author(s):  
Charles Dodson
Keyword(s):  
Service Agency ◽  
Small Community ◽  
Community Banks ◽  
Data Set ◽  
Content Type ◽  
Credit Availability ◽  
Unique Data ◽  
Data Limitations ◽  
Financial Characteristics ◽  
Guaranteed Loans

Purpose – An established paradigm in small business lending is segmented by bank size with large banks more likely to lend to large informationally transparent firms while small banks are more likely to lend to small informationally opaque firms. In light of banking consolidation, this market segmentation can have implications for credit availability. Federal loan guarantees, such as those provided by USDA's Farm Service Agency (FSA) may reduce the risks of lending to informationally opaque firms thereby mitigating the impacts of the bank size lending paradigm. This paper aims to discuss these issues. Design/methodology/approach – This analysis utilized a binomial logit procedure to determine if there was any empirical evidence that smaller community banks served a unique clientele of farmers when making FSA-guaranteed loans. The analysis relied on a unique data set which incorporated detailed data on farm businesses receiving FSA-guaranteed loans, loan characteristics, as well as information about the originating bank and characteristics of the local credit markets. Findings – Results were consistent with the bank size lending paradigm with smaller banks being less likely to engage in fixed-asset lending, and more likely to serve a riskier and less established clientele when making guaranteed loans. Research limitations/implications – Data limitations did not permit detailed analysis of banks larger than $250 million in total assets nor for consideration of non-bank lenders. An expansion by these lender groups into serving more informationally opaque borrowers could mitigate any adverse impacts arising from fewer small community banks. Practical implications – The results suggested that Federal guarantees do not completely eliminate the relative informational advantages of large and small size banks. And, continued bank consolidation, such that there are fewer small community banks, could result in less credit availability among smaller, less creditworthy farm businesses. Social implications – While FSA guarantees may not enhance a large banks propensity to serve informationally opaque farm borrowers, they may enhance the ability of smaller community banks to serve groups specifically targeted through FSA lending programs; the provision of credit to family farmers who, despite being creditworthy, are unable to obtain credit at reasonable rates and terms. Originality/value – The analysis examines relationship between bank size and the use of FSA guarantees using a unique data set which incorporated information on FSA-guaranteed loans, farm financial characteristics, along with characteristics of commercial banks which participated in the FSA-guarantee program.

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