Flood, Farms and Credit: How Bank Ties Keep Farmers, Young and Female, above Water

51 Pages Posted: 16 Jun 2022

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)

Date Written: June 11, 2022

Abstract

Using a rare flood in April 2019 in Iran as a natural experiment, we study the role of local banks in mitigating the financial consequence of natural disasters to smallholder farmers. We find that local branches immediately react to the disaster by increasing their lending for two months following the flood. Analyzing proprietary information on more than 70,000 farmers, we find that farmers with a stronger relationship with their bank - in particular when they are young and female - have a higher chance of access to new credit. Our findings underscore the importance of the presence of local banks in agricultural areas which are exposed to climate risk.

Keywords: Local banks, Relationship lending, Climate Change, Farmers

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

Suggested Citation

Abedifar, Pejman and Kashizadeh, Seyed Javad and Ongena, Steven R. G., Flood, Farms and Credit: How Bank Ties Keep Farmers, Young and Female, above Water (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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