The Costs and Returns of Agricultural Credit Delivery |
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Authors: | Brent A Gloy Michael A Gunderson Eddy L LaDue |
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Institution: | Brent A. Gloy is assistant professor, Department of Applied Economics and Management, Cornell University;Michael A. Gunderson is graduate fellow, Department of Agricultural Economics, Purdue University;and Eddy L. LaDue is W.I. Myers Professor of Agricultural Finance, Department of Applied Economics and Management, Cornell University. |
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Abstract: | Borrower-level data from 963 agricultural lending relationships are used to examine how several factors influence the costs and returns of extending agricultural credit. The results provide estimates of the costs and returns of agricultural lending and the extent to which these costs and returns are influenced by factors such as loan volume, lender/borrower relationship factors, and contract terms. The findings indicate that economies of size exist in agricultural credit delivery and that lenders pass most of these benefits on to borrowers through lower interest rates. In addition, the impacts of lender/borrower relationship factors were relatively small. |
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Keywords: | agricultural finance agricultural lending lending profitability relationship lending |
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