Examining Financial Institutions and Food- & Agricultural- Business Growth Relationship in Rural America

Binod Bhusal, Aditya Khanal and Samjhauta Thapa

No 404342, 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association

Abstract: Access to financial institutions and local credit supply is crucial for local economic development, particularly in supporting business growth in rural communities. This study analyzes the relationship between banking access, credit supply, and agri-food business establishments in rural areas of the Southern United States using a ZIP code-level panel dataset covering 2000–2023. Fixed-effects and dynamic panel Difference-in-difference (DID) models are used to account for unobserved heterogeneity and persistence in business establishment growth in relation to financial access. Results support that greater bank branch presence is positively associated with the number of agri-food business (AFB) establishments, emphasizing the importance of local banking infrastructure for rural entrepreneurship and economic activity. Our loan count and loan volume measures in rural areas, using Community Reinvestment Act (CRA) lending, provide additional evidence that local credit supply supports entrepreneurs—we found around 17-23% dynamic sustained growth in AFBs can be attributable to the loan volume receipt of the top quantile recipient. The findings suggest that maintaining access to financial institutions and strengthening local credit markets have significantly contributed to agri-food business growth and broader rural economic resilience in the Southern United States.

Keywords: Agricultural Finance; Farm Management (search for similar items in EconPapers)
Pages: 28
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/404342/files/1 ... nce_Bhusal_Binod.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea26:404342

DOI: 10.22004/ag.econ.404342

Access Statistics for this paper

More papers in 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().