Flood, Farms and Credit: The Role of Branch Banking in the Era of Climate Change

68 Pages Posted: 16 Jun 2022 Last revised: 30 Nov 2023

See all articles by Pejman Abedifar

Pejman Abedifar

University of St Andrews - School of Management; Khatam University - Tehran Institute for Advanced Studies; Khatam University

Seyed Javad Kashizadeh

Khatam University - Tehran Institute for Advanced Studies

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

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Date Written: June 11, 2022

Abstract

Using Iran’s unexpected flood in April 2019 as a natural experiment, we show that local branches bridge the time gap between the disaster and governmental aids by immediately increasing their lending for two months following the flood. Analyzing proprietary information on more than 53,000 farmers, we find that farmers with a stronger relationship with their branch - particularly younger and females - are more likely to receive a recovery loan. Our findings underscore that despite recent technological advancements, relationship-based branch banking is still important for agrarian societies during catastrophic events.

Keywords: Bank branch, Relationship lending, Climate change, Agricultural loans

JEL Classification: G21, G28, O13, Q14, Q54

Suggested Citation

Abedifar, Pejman and Kashizadeh, Seyed Javad and Ongena, Steven R. G., Flood, Farms and Credit: The Role of Branch Banking in the Era of Climate Change (June 11, 2022). Swiss Finance Institute Research Paper No. 22-52, Available at SSRN: https://ssrn.com/abstract=4138142 or http://dx.doi.org/10.2139/ssrn.4138142

Pejman Abedifar

University of St Andrews - School of Management ( email )

The Gateway, North Haugh
St Andrews, Fife KY16 9RJ
United Kingdom

Khatam University - Tehran Institute for Advanced Studies ( email )

Tehran
Iran

Khatam University

Tehran
Iran

Seyed Javad Kashizadeh

Khatam University - Tehran Institute for Advanced Studies

Iran

Steven R. G. Ongena (Contact Author)

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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