Factors Affecting Farm Loan Delinquency in the Southeastern USA

This study establishes which factors affect Southeast US farmers' ability to meet their loan repayment obligations within the stipulated loan term. The study uses a 10-year (2003-2012) pooled cross-sectional data from the USDA ARMS survey data (Phase III). A probit model is used to regress delinquency against various borrower-specific, loan-specific, lender-specific, macroeconomic and climatic variables for the first part. The results show that farmers with larger farms, those with insurance and higher net income, farmers with smaller debt to asset ratio, with single loans, and those that take majority of their loans from sources other than commercial banks are less likely to be delinquent. Climate variables such as temperature and precipitation also affect outcomes, but by minute magnitudes