El Niño and Agricultural Lending in the Southeastern U.S.A.

Nadolnyak D. and V. Hartarska, (2013) “El Niño and Agricultural Lending in the Southeastern U.S.A.” Southern Business and Economics Journal, 36(1):35-56

28 Pages Posted: 11 Dec 2017

See all articles by Valentina Hartarska

Valentina Hartarska

Auburn University - Department of Agricultural Economics and Rural Sociology; Auburn University - Department of Finance

Denis A. Nadolnyak

Auburn University - Department of Agricultural Economics and Rural Sociology

Date Written: March 5, 2013

Abstract

We study how agricultural loan portfolios in commercial banks serving agricultural producers are affected by inter-annual climate variability in the Southeast U.S. - a region strongly affected by the El Nino Southern Oscillation (ENSO). We use panel data for 473 agricultural banks from six southeastern states over the period of 1991-2010, together with several ENSO indexes. We find that non-neutral ENSO years that typically have higher incidence of weather extremes are associated with smaller levels of non-performing loans suggesting that farmers’ losses in extreme years are helped by support mechanisms. Consistent with recent theoretical work, and findings about US community banks, our results suggest that the impact of the ENSO is mitigated by complementary financial markets and support mechanisms.

Keywords: Agricultural Commercial Banks, Climate Variability, ENSO, Climate Change, Banking

JEL Classification: G21, Q14, G1, G21

Suggested Citation

Hartarska, Valentina and Nadolnyak, Denis A., El Niño and Agricultural Lending in the Southeastern U.S.A. (March 5, 2013). Nadolnyak D. and V. Hartarska, (2013) “El Niño and Agricultural Lending in the Southeastern U.S.A.” Southern Business and Economics Journal, 36(1):35-56. Available at SSRN: https://ssrn.com/abstract=3083679

Valentina Hartarska (Contact Author)

Auburn University - Department of Agricultural Economics and Rural Sociology ( email )

Comer Hall
Auburn, AL 36849
United States

Auburn University - Department of Finance ( email )

Auburn, AL 36849
United States

Denis A. Nadolnyak

Auburn University - Department of Agricultural Economics and Rural Sociology ( email )

Comer Hall
Auburn, AL 36830
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
6
Abstract Views
108
PlumX Metrics