The determinants of loan acceptance: A case study of French farms

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This paper analyses the credit granting process to farms, by identifying the main criteria that are used by bank analysts to decide whether a loan has to be accepted, and along which modalities. Using individual data collected in a French bank and processing (ordered) logit models, we show that farms benefitting from a good capital structure and external income have higher opportunity to receive the requested loan. The analysts' opinion is central in the outcome of the loan process. Such information may be useful for the bank by making explicit the principal decision criteria, which are not only objective.

Author(s):

Geoffroy Enjolras    
CERAG, Université Grenoble-Alpes
France

Philippe Madiès    
CERAG, Université Grenoble-Alpes
France