Iuliia Tetteh, M. Boehlje, A. Giri, Sankalp Sharma
{"title":"Strategic behavior of nontraditional lenders in agricultural credit markets","authors":"Iuliia Tetteh, M. Boehlje, A. Giri, Sankalp Sharma","doi":"10.1108/afr-06-2021-0074","DOIUrl":null,"url":null,"abstract":"PurposeThis paper examines credit products, operational performance and business models employed by nontraditional lenders (NTLs) in agricultural credit markets.Design/methodology/approachTwo research methods were employed in this study: (1) an executive interview to collect primary data and (2) a case study approach to analyze the findings and develop insights.FindingsThe findings indicate the presence of significant differences among lenders across and within three categories of NTLs (large volume, vendor financing and collateral-based NTLs). For example, collateral-based NTLs employ different strategies focusing on types of loans, funding sources, commodities they support and geographic coverage to further segment the market. NTLs in this study were able to capture market by successfully identifying gaps in the supply side of agricultural credit and developing products that meet the needs of that niche (e.g. heavy renters, large operations, producers seeking fixed interest rates for term loans, financially fragile producers). Most of the interviewed NTLs had credit standards comparable to those of traditional lenders and consider them both competitors and partners since many NTLs partner with traditional lenders on participation loans, loan servicing and/or sourcing funds.Originality/valueThe supply side of a nontraditional lending has not been studied extensively due to the proprietary nature of data. The executive interviews conducted in this study allowed for accumulation of industry data, which is not available otherwise.","PeriodicalId":46748,"journal":{"name":"Agricultural Finance Review","volume":" ","pages":""},"PeriodicalIF":1.5000,"publicationDate":"2021-12-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"2","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Agricultural Finance Review","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/afr-06-2021-0074","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"AGRICULTURAL ECONOMICS & POLICY","Score":null,"Total":0}
引用次数: 2
Abstract
PurposeThis paper examines credit products, operational performance and business models employed by nontraditional lenders (NTLs) in agricultural credit markets.Design/methodology/approachTwo research methods were employed in this study: (1) an executive interview to collect primary data and (2) a case study approach to analyze the findings and develop insights.FindingsThe findings indicate the presence of significant differences among lenders across and within three categories of NTLs (large volume, vendor financing and collateral-based NTLs). For example, collateral-based NTLs employ different strategies focusing on types of loans, funding sources, commodities they support and geographic coverage to further segment the market. NTLs in this study were able to capture market by successfully identifying gaps in the supply side of agricultural credit and developing products that meet the needs of that niche (e.g. heavy renters, large operations, producers seeking fixed interest rates for term loans, financially fragile producers). Most of the interviewed NTLs had credit standards comparable to those of traditional lenders and consider them both competitors and partners since many NTLs partner with traditional lenders on participation loans, loan servicing and/or sourcing funds.Originality/valueThe supply side of a nontraditional lending has not been studied extensively due to the proprietary nature of data. The executive interviews conducted in this study allowed for accumulation of industry data, which is not available otherwise.
期刊介绍:
Agricultural Finance Review provides a rigorous forum for the publication of theory and empirical work related solely to issues in agricultural and agribusiness finance. Contributions come from academic and industry experts across the world and address a wide range of topics including: Agricultural finance, Agricultural policy related to agricultural finance and risk issues, Agricultural lending and credit issues, Farm credit, Businesses and financial risks affecting agriculture and agribusiness, Agricultural policies affecting farm or agribusiness risks and profitability, Risk management strategies including the use of futures and options, Rural credit in developing economies, Microfinance and microcredit applied to agriculture and rural development, Financial efficiency, Agriculture insurance and reinsurance. Agricultural Finance Review is committed to research addressing (1) factors affecting or influencing the financing of agriculture and agribusiness in both developed and developing nations; (2) the broadest aspect of risk assessment and risk management strategies affecting agriculture; and (3) government policies affecting farm profitability, liquidity, and access to credit.