| Government intervention in the farm credit market is premised on filling credit gaps so that credit is available to all creditworthy farm borrowers. The Farm Service Agency (FSA), the government's lending arm to production agriculture, provides financial assistance to "excluded" (underserved) farm borrowers who are unable to obtain commercial credit even though they are creditworthy. FSA seeks to improve these borrowers' financial well-being. In this study, financial improvement is measured by changes in net worth, debt-to-asset ratio and current ratio of borrowers. Additionally, financial well-being can be measured by how frequently a borrower needs loan servicing actions. Our analysis uses numbers of delinquencies, and loan restructurings over a seven-year period following loan origination as measures of borrower financial well-being and progress. The data used in this study come from a nationwide survey of FSA direct loan borrowers who originated loans during fiscal years (FY) 1994-1996. In the simplest analysis, changes are considered as a function of loan type (FO, OL, and EM) and, for the cases of OL and FO loans, whether they are SDA or BF. For the continuous measures---net worth, debt-to-asset, and current ratio---classical regression models are estimated. Poisson and negative binomial count data models will be estimated where the dependent variables are measured as integers. |
