Credit Risk Assessment and Racial Minority Lending at the Farm Service Agency

The nature of credit risk assessment and basis of loan approval decisions of the Farm Service Agency are analyzed in the aftermath of the black farmers’ 1997 class action suit against the U.S. Department of Agriculture. This study did not uncover convincing evidence of racial discrimination against nonwhite borrowers under a binomial logistic framework based on the probability of a loan application’s approval. Moreover, the collective use of more stringent and objective credit-scoring measures usually employed by commercial lenders is less evident in the Farm Service Agency’s evaluation of loan applications.

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Journal Article
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Journal of Agricultural and Applied Economics, 38, 1
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JEL Codes:
G20; G21; G28; Q10; Q14

 Record created 2017-04-01, last modified 2020-10-28

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