Perceived Competition in Agricultural Lending: Stylized Facts and an Agenda for Future Research

Kuethe, Todd; Fiechter, Chad; Oppedahl, David B.

doi:10.2139/ssrn.3936873

Cited by 1 publication

(1 citation statement)

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“…Second, we have not provided evidence of the attributes of loans that attract and retain farmers to banks. This is of great importance, particularly with competitive pressures coming from the Farm Credit System and non-traditional lenders (Kuethe et al, 2022). Third, policies that impact farm income may have direct consequences for agricultural lenders.…”

Section: Discussionmentioning

confidence: 99%

The Supply and Demand of Agricultural Loans

Scott¹,

Kuethe²,

Kreitman³

et al. 2022

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Credit plays a critical role in the agricultural sector, but many studies suggest that farmers are credit constrained. We examine the degree to which changes in non-realestate agricultural loans at commercial banks are driven by changes in supply and demand, using information provided by agricultural lending surveys conducted by the Federal Reserve Banks of Chicago, Kansas City, and Minneapolis. Building on recent studies of loan officer opinion surveys, we estimate the changes in agricultural loan supply and demand using an unbalanced panel of 1,024 banks across 191 quarters (2002:Q1-2021:Q2). The survey responses provide instruments of "pure" supply and demand changes that allow us to examine fluctuations in bank-level agricultural loan volumes. We find that changes in the volume of non-real-estate farm loans at commercial banks are principally driven by changes in excess demand for loans. In addition, we demonstrate that excess loan demand is countercyclical to aggregate farm income.

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Section: Discussionmentioning

confidence: 99%