The Study of Effective Factors on Non Repayment of Agricultural Loan Case Study Isfahan Agricultural Bank

One of the important issues about granted facilities of the banks is non repayment of the loan by the borrowers. Many factors are involved in non-repayment of the bank’s loan. Identifying these factors can be reduced credit risk. The goal of the research is studied effective factors on nonrepayment of the loans in branches of the agricultural bank in the West region of Isfahan. Therefore with use of a random sample, the information was extracted of 100 files on small and average borrowers among 234 cases between 2007 to 2009 years. This information includes demographic, social and financial characteristics of borrowers and technical characteristics of loan that estimated with use of probit and logit model. The results show that whatever the borrowers were younger, they had better performance on the repayment of loans. Loans given to the agriculture sector have a better repayment too. Also whatever the amount of loan was lower, borrowers have been better performance on the repayment. In addition, lower interest rates lead to better repayment of loans. Loans with real estate collaterals had better performance than partnership collaterals on the repayment. Also we found that more of the loans task has not been repaid and when the share capital of the borrower in the whole project is more, they have higher financial power to repay the loans