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Flood, farms and credit: The role of branch banking in the era of climate change


Abedifar, Pejman; Kashizadeh, Seyed Javad; Ongena, Steven (2024). Flood, farms and credit: The role of branch banking in the era of climate change. Journal of Corporate Finance, 85:102544.

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.

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.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Business and International Management
Social Sciences & Humanities > Finance
Social Sciences & Humanities > Economics and Econometrics
Social Sciences & Humanities > Strategy and Management
Uncontrolled Keywords:Bank branch, Relationship lending, Climate change, Agricultural loans
Scope:Discipline-based scholarship (basic research)
Language:English
Date:1 April 2024
Deposited On:01 Mar 2024 10:10
Last Modified:30 Jun 2024 03:39
Publisher:Elsevier
ISSN:0929-1199
OA Status:Hybrid
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1016/j.jcorpfin.2024.102544
  • Content: Published Version
  • Language: English
  • Licence: Creative Commons: Attribution 4.0 International (CC BY 4.0)