Examining the Relationships between Land Values and Credit Availability

May 11, 2020
By Ana Cláudia Sant’Anna, Cortney Cowley and Ani Katchova


Research Working PaperConsidering factors that represent credit availability at agricultural banks together, rather than separately, can better capture their effects on farmland values.

Given the changes made to the agricultural lending system since the 1980s farm crisis, we investigate the current effects of credit availability on land values. Using data from Federal Reserve Agricultural Credit Surveys, we measure credit availability and perform county-level panel fixed effects estimations controlling for land value determinants, credit availability factors, and county and macroeconomic factors. We build an indicator of increased credit availability and find that estimating farmland values with different factors of credit availability separately could mask combined effects. When conditions for credit availability increase or remain unchanged from the previous year, land values may increase by up to 25 percent. While higher credit availability may facilitate land acquisition, it can also put upward pressure on land values.

Download paper

RWP 20-02, May 2020

JEL Classification: G21, Q14, Q15

Article Citation

  • Sant’Anna, Ana Cláudia, Cortney Cowley, and Ani Katchova. 2020. “Examining the Relationships between Land Values and Credit Availability.” Federal Reserve Bank of Kansas City, Research Working Paper no. 20-02, May. Available at https://doi.org/10.18651/RWP2020-02

Related Research

  • Briggeman, Brian C., Charles A. Towe, and Mitchell J. Morehart. 2009. “Credit Constraints: Their Existence, Determinants, and Implications for U.S. Farm and Nonfarm Sole Proprietorships.” American Journal of Agricultural Economics, vol. 91, no. 1, pp. 275–289. Available at https://doi.org/10.1111/j.1467-8276.2008.01173.x
  • Devadoss, Stephen, and Viswanadham Manchu. 2007. “A Comprehensive Analysis of Farmland Value Determination: A County-Level Analysis.” Applied Economics, vol. 39, no. 18, pp. 2323–2330. Available at https://doi.org/10.1080/00036840600675687
  • Hartarska, Valentina, Denis Nadolnyak, and Xuan Shen. 2015. “Agricultural Credit and Economic Growth in Rural Areas.” Agricultural Finance Review, vol. 75, no. 3, pp. 302–312. Available at https://doi.org/10.1108/AFR-04-2015-0018