Date of Graduation

8-2025

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor/Mentor

Ahrendsen, Bruce L.

Committee Member

Short, Gianna

Second Committee Member

Conner, Lawson

Keywords

farm loans

Abstract

This thesis investigates the factors associated with loan defaults in the USDA's Direct Farm Ownership (FO) loan program, emphasizing factors that affect how long it takes to default. This study uses a Cox Proportional Hazards model on a dataset of more than 47,000 loan records originated during 2011-2020 to identify loan characteristics, financial factors, and geographic settings related to the likelihood and timing of delinquency, which is defined as being 90 days past due. Recent research has focused on differences in loan outcomes based on demographics. This study, on the other hand, focuses on loan size, interest rates and terms, and borrower solvency, liquidity, and previous credit history, including loan restructuring, as risk factors. Kaplan-Meier survival curves and multivariate hazard ratios show that factors like high debt-to-asset ratios, high interest rates, and previous restructurings increase delinquency risk significantly. There is also a lot of variation in the chances of loans surviving in different regions. For example, loans in the Southern Seaboard and Eastern Uplands have higher hazard rates. The results also show that borrowers who get targeted loans based on their experience, gender, or race and ethnicity are more likely to be late on their payments. These results have direct effects on how to assess risk and make policies in agricultural finance. They show that we need to create more nuanced ways to help borrowers and tailor loan servicing strategies.

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