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Johannes I. F. Henning

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Journal article
Published: 13 November 2019 in Agriculture
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The purpose of the paper is to determine the influence of different factors used by a formal credit institution to evaluate loan applications in the agricultural sector. The research attempts to capture the actual factors considered by credit institutions rather than the traditional factors found in literature. Loan applications from 128 farmers, predominantly commercial farmers, were obtained from a credit institution with branches situated in various provinces of South Africa. Data consisted of loan application information which is broader than the financial information normally obtained in credit research, and the final decision of the credit provider. Principal component logistic regression was used to investigate the likeliness with which loan application variables influence the outcome of the loan application. Results indicate that loan applications that are more likely to be successful are older more experienced farmers, who can provide sufficient collateral, have more years of business with the credit provider, have an acceptable credit history, request smaller loan amounts, have lower interest expense ratio, higher production cost ratios, and have diversification strategies. This paper contributes to knowledge on information used by financial credit providers (institutions) in classifying agricultural loan applications as successful as guided by actual factors used in credit decision making by the credit provider.

ACS Style

Johannes I. F. Henning; Dominique A. Bougard; Henry Jordaan; Nicolette Matthews. Factors Affecting Successful Agricultural Loan Applications: The Case of a South African Credit Provider. Agriculture 2019, 9, 243 .

AMA Style

Johannes I. F. Henning, Dominique A. Bougard, Henry Jordaan, Nicolette Matthews. Factors Affecting Successful Agricultural Loan Applications: The Case of a South African Credit Provider. Agriculture. 2019; 9 (11):243.

Chicago/Turabian Style

Johannes I. F. Henning; Dominique A. Bougard; Henry Jordaan; Nicolette Matthews. 2019. "Factors Affecting Successful Agricultural Loan Applications: The Case of a South African Credit Provider." Agriculture 9, no. 11: 243.

Journal article
Published: 14 January 2016 in Sustainability
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Farmers use credit from commercial credit providers to finance production activities. Commercial credit providers have to predict the financial sustainability of the enterprise to ensure that the borrower will have the ability to repay the loan. A Delphi study was conducted to explore what factors are used as indicators of loan-repayment ability of farmers. The objective was not only to identify factors that are currently considered, but also to identify other personal attributes that may improve the accuracy in predicting the repayment ability of potential borrowers. The Delphi was applied to a panel consisting of nine credit analysts and credit managers from a commercial credit provider in South Africa. The results indicate that the current and past financial performance, account standing, collateral, and credit record of the farm are very important in the assessment of applications in terms of financial performance. Experience and the success factors compared to competitors were found to be important, while age and education/qualification are regarded as less important in predicting repayment ability. The results also show that, although not currently objectively included in credit evaluations, credit analysis regards leadership and human relations; commitment and confidence; internal locus of control; self-efficacy; calculated risk taking; need for achievement; and opportunity seeking as important indicators of the ability of potential borrows to repay their loans. Thus, credit analysts and managers also regard management abilities and entrepreneurial characteristics of potential borrowers to be good indicators of repayment ability. Results from this research provide new indicator factors that can be used to extend existing credit evaluation instruments in order to more accurately predict repayment ability.

ACS Style

Johannes I. F. Henning; Henry Jordaan. Determinants of Financial Sustainability for Farm Credit Applications—A Delphi Study. Sustainability 2016, 8, 77 .

AMA Style

Johannes I. F. Henning, Henry Jordaan. Determinants of Financial Sustainability for Farm Credit Applications—A Delphi Study. Sustainability. 2016; 8 (1):77.

Chicago/Turabian Style

Johannes I. F. Henning; Henry Jordaan. 2016. "Determinants of Financial Sustainability for Farm Credit Applications—A Delphi Study." Sustainability 8, no. 1: 77.