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Geographic diversification, climate risk, and bank lending: Evidence from farm loans

Emdad Islam & Mandeep Singh

Journal of Financial Intermediation2025https://doi.org/10.1016/j.jfi.2025.101152article
AJG 4ABDC A*
Weight
0.44

Abstract

This study examines how geographically diversified banks adjust lending practices in response to abnormal hot temperatures, a proxy for climate risk, and finds that these banks reduce small farm lending by 2–3 percent more than geographically constrained banks after a standard deviation increase in abnormal temperatures. Geographically diversified banks demonstrate proactive portfolio risk management by prioritizing credit in core markets and reallocating funds away from high-risk non-core regions, leaving lending gaps in affected counties. These findings highlight the importance of geographic diversification in building climate resiliency for banks while reducing the total credit available to farmers in a region.

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https://doi.org/https://doi.org/10.1016/j.jfi.2025.101152

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@article{emdad2025,
  title        = {{Geographic diversification, climate risk, and bank lending: Evidence from farm loans}},
  author       = {Emdad Islam & Mandeep Singh},
  journal      = {Journal of Financial Intermediation},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jfi.2025.101152},
}

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Geographic diversification, climate risk, and bank lending: Evidence from farm loans

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Evidence weight

0.44

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.32 × 0.4 = 0.13
M · momentum0.57 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.