Examining the Relationships between Land Values and Credit Availability

24 Pages Posted: 23 Jun 2020

See all articles by Ana Claudia Sant' Anna

Ana Claudia Sant' Anna

affiliation not provided to SSRN

Cortney Cowley

affiliation not provided to SSRN

Ani Katchova

The Ohio State University

Date Written: May 11, 2020

Abstract

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%. While higher credit availability may facilitate land acquisition, it can also put upward pressure on land values.

Keywords: Ag Credit Survey, farm loans, fixed effects, interest rates, land values

JEL Classification: G21, Q14, Q15

Suggested Citation

Sant' Anna, Ana Claudia and Cowley, Cortney and Katchova, Ani, Examining the Relationships between Land Values and Credit Availability (May 11, 2020). Federal Reserve Bank of Kansas City Working Paper No. 20-02, Available at SSRN: https://ssrn.com/abstract=3628814 or http://dx.doi.org/10.2139/ssrn.3628814

Ana Claudia Sant' Anna (Contact Author)

affiliation not provided to SSRN

Cortney Cowley

affiliation not provided to SSRN

Ani Katchova

The Ohio State University ( email )

2120 Fyffe Rd
Columbus, OH 43210-1067
United States

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