Low Access to Credit Decreases Asset Prices - Evidence from a Quasi-Experiment in Agriculture

The impact of credit supply on asset prices is one of the central puzzles in finance, given the simultaneous causal effects of credit and asset prices. In this paper, we provide a clean identification of the causal effect of credit supply on farmland values with a difference-in-differences approach. In the past decade, farmland values skyrocketed in the U.S. Heartland due in large to the increased demand for corn induced by ethanol policy. We compare changes in farmland values before and after the ethanol boom, for counties with low and high credit supply. We find a large negative and statistically significant impact of low credit supply on farmland values during the ethanol boom.


Issue Date:
2015
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/205127
Total Pages:
36
JEL Codes:
Q1




 Record created 2017-04-01, last modified 2017-08-22

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