Would More Rural Bank Access to Nonlocal Funds Provide Public Benefits?

Robert Collender

No 33669, Agricultural Information Bulletins from United States Department of Agriculture, Economic Research Service

Abstract: Restructuring of U.S. banking markets has raised concerns that insufficient access to loanable funds will limit economic growth in some rural areas. Access to nonlocal funds can provide public benefits through enhanced competition and efficiency, but subsidized access to nonlocal funds can create economic distortions. Because most rural areas are served by few lenders, public benefits may be limited if additional access does not encourage new competition. Unsubsidized market mechanisms could address the liquidity, risk management, and competitive challenges that some small rural banks may face. At the same time, market mechanisms can promote efficiency-enhancing use of nonlocal funding and limit distortions.

Keywords: Community/Rural/Urban Development; Financial Economics (search for similar items in EconPapers)
Pages: 4
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uersab:33669

DOI: 10.22004/ag.econ.33669

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