Abstract:
One of the main challenges facing the Agriculture B
ank of Iran regarding lending loans
is the high probability of default by farmers. Seve
ral factors could be involved in this
issue and should be considered in order to control
and reduce the risk in the failure of
repayment. This study aimed to examine the factors
affecting the repayment performance
of agricultural loans in the city of Maragheh in Ea
st Azarbaijan Province of Iran.
Required data were obtained from a sample of 779 in
dividual farmers who had previously
received loans from Agricultural Bank during the pe
riod 2004-2008. Nested Logit Model
(NLM) was applied for analyzing the data and, for t
his purpose, STATA software was
used in the study. Results revealed that having an
activity besides farming, extension of
the repayment period of the loan, and large volume
of received loans are the factors that
had significant negative impacts on loan repayment.
On the other hand, factors including
high interest rates of loans, having collateral of
guarantor, services received from the
banks, and long term maturity period for the loans
increase the probability of timely loan
repayment significantly.
Keywords:
Agricultural bank, Agricultural credits, Nested Lo
git Model, Probability of
repayment failure, Repayment performance.
