by: Ana Cláudia Sant’Anna, Cortney Cowley and Ani Katchova
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RWP 20-02, May 2020

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.

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 External Linkhttps://doi.org/10.18651/RWP2020-02

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  • 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 External Linkhttps://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 External Linkhttps://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 External Linkhttps://doi.org/10.1108/AFR-04-2015-0018

Author

Cortney Cowley

Senior Economist

Cortney Cowley is a senior economist in the Regional Affairs Department of the Federal Reserve Bank of Kansas City. She also serves as a special advisor on the agricultural econ…

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