The importance of loan pricing and profitability analysis

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Reference no: EM132163812

Loan pricing is a key managerial control variable for agricultural lenders. Loan pricing directly affects, and is affected by, bank profitability, competitor relationships, customer relationships and ultimately shareholder value. Pricing is often benchmarked solely on competition. However, to remain viable over the longer-term, a lending institution needs to establish loan pricing policies that adequately compensate the institution's shareholders for the costs and risks of making loans. Pricing objectives should be established to meet the institution's strategic and marketing objectives.

Discuss the importance of loan pricing and profitability analysis for managers in agribusiness.

Reference no: EM132163812

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