Factors affecting farm credit use

Abstract

This study analyzes the personal and farm characteristics that influence the use of farm credit, the degree of indebtedness, and debt consolidation for U.S. farms. Whereas previous studies have examined the supply side of agricultural credit using lender‐based data, this study considers the demand side of agricultural credit using representative farm‐level data from the USDA’s 2001 Agricultural Resource Management Study (ARMS). The results show that gross farm income, risk management strategies, and operator’s age and risk aversion had significant influences on the likelihood of farm credit use by rural residence, intermediate, and commercial farms.