Save the Farms: Nonlinear Impact of Climate Change on Banks' Agricultural Lending

Save the Farms: Nonlinear Impact of Climate Change on Banks' Agricultural Lending | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Save the Farms: Nonlinear Impact of Climate Change on Banks' Agricultural Lending Teng Liu This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-5214161/v1 This work is licensed under a CC BY 4.0 License Status: Published Journal Publication published 24 Mar, 2025 Read the published version in Climatic Change → Version 1 posted 4 You are reading this latest preprint version Abstract The agricultural sector is particularly susceptible to the impact of climate change. In this paper, I investigate how vulnerability to climate change affects U.S. farms' credit access, and demonstrates that such impact is unequally distributed across farms. I find that higher exposure to climate change, measured by temperature anomaly, reduces bank lending to farms. Such impact is persistent, nonlinear, and heterogeneous. Small and medium farms almost always experience loss of loan access. In comparison, large farms see less severe credit contraction, and in some cases may even see improvement in funding. While small banks carry the burden of continuing to lend to small farms, their limited market share cannot compensate for the reduction of lending from medium and large banks. These results suggest that factors such as farm size and bank type can amplify the financial impact of climate change. banks agricultural finance climate change Full Text Supplementary Files farmbanksupplementary.pdf Cite Share Download PDF Status: Published Journal Publication published 24 Mar, 2025 Read the published version in Climatic Change → Version 1 posted Reviewers agreed at journal 15 Nov, 2024 Reviewers invited by journal 15 Nov, 2024 Editor assigned by journal 22 Oct, 2024 First submitted to journal 18 Oct, 2024 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-5214161","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":378711854,"identity":"f06f9b24-1266-43bd-b0be-2b3690b9667c","order_by":0,"name":"Teng Liu","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAsElEQVRIiWNgGAWjYHACwwMJDDZQNhsR6nkYGAyAWtJI1cLAcJgELfbszRsOPGw7n9jff/gBw4eyw4S18PAcKziQ2HY7ccaNNAPGGeeI0SKRYwDWskGCh4GZt40YLfJvQFrOJW7gP8PA/JcoLRI8IC0HEjcw5DAwMxKl5UxawYGEc8nGIL8c7DmXTlgLe/vhjQ9/lNnJAkPs4YMfZdaEtaCAAySqHwWjYBSMglGACwAAulo9/yGR4G0AAAAASUVORK5CYII=","orcid":"https://orcid.org/0000-0003-1706-1005","institution":"University of California Santa Cruz","correspondingAuthor":true,"prefix":"","firstName":"Teng","middleName":"","lastName":"Liu","suffix":""}],"badges":[],"createdAt":"2024-10-06 18:19:53","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-5214161/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-5214161/v1","draftVersion":[],"editorialEvents":[{"content":"https://doi.org/10.1007/s10584-025-03907-6","type":"published","date":"2025-03-24T15:57:06+00:00"}],"editorialNote":"","failedWorkflow":false,"files":[{"id":79604924,"identity":"ea0630ff-fe94-4593-b99a-433f4f1b22a4","added_by":"auto","created_at":"2025-03-31 16:09:07","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":3330954,"visible":true,"origin":"","legend":"","description":"","filename":"farmbank.pdf","url":"https://assets-eu.researchsquare.com/files/rs-5214161/v1_covered_61f2b333-0f74-4ce4-9a53-0f4ff95fc883.pdf"},{"id":70306453,"identity":"4c5145ba-0fe0-4f83-aa46-db5118b1975d","added_by":"auto","created_at":"2024-12-02 03:11:47","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"supplement","size":4844539,"visible":true,"origin":"","legend":"","description":"","filename":"farmbanksupplementary.pdf","url":"https://assets-eu.researchsquare.com/files/rs-5214161/v1/e4d5aedab83c8e56908da8ee.pdf"}],"financialInterests":"","formattedTitle":"Save the Farms: Nonlinear Impact of Climate Change on Banks' Agricultural Lending","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":true,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":true,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"climatic-change","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"clim","sideBox":"Learn more about [Climatic Change](https://www.springer.com/journal/10584)","snPcode":"","submissionUrl":"https://www.editorialmanager.com/clim/default.aspx","title":"Climatic Change","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"em","reportingPortfolio":"Springer Hybrid","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"banks, agricultural finance, climate change","lastPublishedDoi":"10.21203/rs.3.rs-5214161/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-5214161/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"The agricultural sector is particularly susceptible to the impact of climate change. 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