Examining the Relationship between Land Values and Credit Availability

Abstract Increased credit availability facilitates land acquisition, but higher land values also hinder it. We investigate the impact of credit availability on land values, after regulatory changes in the lending system. We build an index of increased credit availability using Federal Reserve and Federal Deposit Insurance Corporation data. County-level panel fixed effects estimations are performed controlling for land value determinants, credit availability, and county-level macroeconomic factors. We find that estimating the effects of credit availability separately masks its total effect. Results show a 0.1 change in the index for increased credit availability is associated with 1.64–1.96% increase in land values.

[1]  Marc F. Bellemare,et al.  Farmers Markets and Food‐Borne Illness* , 2018 .

[2]  Wendong Zhang,et al.  The current farm downturn vs the 1920s and 1980s farm crises: An economic and regulatory comparison , 2018 .

[3]  Valentina Hartarska,et al.  Agricultural Credit and Economic Growth in Rural Areas , 2015 .

[4]  Valentina Hartarska,et al.  Financing Constraints and Access to Credit in a Postcrisis Environment: Evidence from New Farmers in Alabama , 2012, Journal of Agricultural and Applied Economics.

[5]  R. Rajan,et al.  The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s , 2012 .

[6]  A. Mishra,et al.  The Buck Stops Where? The Distribution of Agricultural Subsidies , 2011 .

[7]  Brian C. Briggeman,et al.  Credit Constraints: Their Existence, Determinants, and Implications for U.S. Farm and Nonfarm Sole Proprietorships , 2009 .

[8]  Diana K. Fletschner.  Women's Access to Credit: Does it Matter for Household Efficiency? , 2008 .

[9]  S. Devadoss,et al.  A comprehensive analysis of farmland value determination: a county-level analysis , 2007 .

[10]  A. Mishra,et al.  What's Wrong with Our Models of Agricultural Land Values? , 2003 .

[11]  K. McNamara,et al.  Determinants of German farmland prices , 1999 .

[12]  Rebel A. Cole,et al.  The Importance of Relationships to the Availability of Credit , 1998 .

[13]  W. Keeton.  Do bank mergers reduce lending to businesses and farmers? New evidence from Tenth District states , 1996 .

[14]  R. Just,et al.  Understanding Farmland Price Changes , 1993 .

[15]  Allen M. Featherstone,et al.  An Examination of Farm Sector Real Asset Dynamics: 1910–85 , 1987 .

[16]  A. Schmitz,et al.  Farmland Accumulation and Prices , 1982 .

[17]  M. Morehart,et al.  THE INFLUENCE OF URBAN AREAS ON FARMLAND VALUES , 2011 .

[18]  A. Schmitz,et al.  Farmland Price Behavior And Credit Allocation , 1984 .

[19]  J. Guttentag.  Credit Availability, Interest Rates, and Monetary Policy , 1960 .