Timely Repayment of Agricultural Loans: Evidence from Serbian Farmers

• Dejan Mirč ^[1] ; Marina Ignjatović ^[2] ; Dragan Milić ^[1] ; Vladimir Crnojević ^[1] ; Nedeljko Tica ^[1]
  1. [1] University of Novi Sad

     University of Novi Sad

     RS.VO.6.3194359, Serbia

     
  2. [2] University of Belgrade

     University of Belgrade

     Serbia

     
• Localización: New medit: Mediterranean journal of economics, agriculture and environment = Revue méditerranéenne d'economie, agriculture et environment, ISSN 1594-5685, Vol. 23, Nº. 4, 2024, págs. 67-84
• Idioma: inglés
• DOI: 10.30682/nm2404e
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• Resumen

  • Our study aimed to determine factors influencing timely loan repayment of smallholder farmers. We used data from 1735 liquidated loans, collecting a set of 36 feasible determinant variables. The study was two-folded. In the first step, with a 64% accuracy, a Logit model revealed 18 significant predictors of timely repayment. Previously credited clients, special agricultural account, average monthly inflow, loan amount, age when applying for a loan, clean credit history, and no credit in the past have a positive influence, while number of transactions, profiling, owned farm area, past due records over five days, tax debt status, and livestock had a negative influence on timely repayment.

    We used machine learning algorithms in the second step to enhance model prediction performance. XGBoost model that envisioned the timely repayment with 92% accuracy. As significant predictors, Shapley’s additive explanations identified clean credit history, average monthly inflow, time of owning the account, age when applying for a loan, and horticulture. The study’s findings provide insight into the critical factors in substantially achieving a high repayment rate on borrowed funds.