Debt Covenant Violations of Private Lending Agreements of Agricultural Cooperatives

Seven years of debt covenant violations of private lending agreements of eighty-three agricultural cooperatives were examined. A LOGIT prediction model of debt covenant violations was developed and the factors that affect debt covenant violations were identified. These factors include cooperative size, working capital, the quick ratio, the existence of a management compensation plan, the tax-exempt status of the cooperative, a bank rating, and the current amount of loan payments.