Logit Analysis for Profit Maximizing Loan Classification
Watt, David L.
Mortensen, Timothy L.
Leistritz, F. Larry
Financial Economics, | farm, financial, logistic regression, loan delinquency, Farm Management, Financial Economics,
Lending criteria and loan classification methods are developed. Rating system breaking points are analyzed to present a method to maximize loan revenues. Financial characteristics of farmers are used as determinants of delinquency in a multivariate logistic model. Results indicate that debt-to-asset and operating ration are most indicative of default.