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.
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.
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.
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.
Different loan characteristics and macroeconomic conditions significantly influence the occurrence of possible guarantee outcomes and time to the outcomes.
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.
The assistance of Diana Danforth and the suggestions of anonymous referees are gratefully acknowledged. This work was supported, in part, by the USDA National Institute of Food and Agriculture, Hatch/Multistate project 1005079 and Hatch project 1005031. However, any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the view of the U.S. Department of Agriculture, the University of Arkansas, or Oregon State University.
Long, D., Ahrendsen, B., L. Dixon, B. and B. Dodson, C. (2016), "Modeling duration of FSA operating and farm ownership loan guarantees", Agricultural Finance Review, Vol. 76 No. 4, pp. 426-444. https://doi.org/10.1108/AFR-04-2016-0036Download as .RIS
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