The impact of natural disasters on agricultural credit risk: A theoretical model and empirical test

Abstract

Natural disasters exert a profound influence on agricultural production and the stable development of rural financial systems. This paper utilizes a multi-agent modeling approach to construct a theoretical framework for understanding the transmission of agricultural credit risk in the context of natural disasters, and empirically examines the underlying mechanisms. The findings reveal several key insights. First, natural disasters significantly escalate credit risk in the agricultural sector. Second, the maturity of agricultural insurance infrastructure plays a critical role in mitigating the impact of natural disasters on agricultural credit risk. Finally, a well-developed agricultural insurance system is essential for mitigating the adverse effects of natural disasters on agricultural credit risk. These findings suggest that accelerating the development of agricultural insurance, particularly in regions prone to natural disasters, could serve as an effective strategy for managing and containing agricultural credit risk.