Getting money in the country: Is there a liability of rurality facing SMEs?

Marc Cowling; Ross Brown; Weixi Liu; Huan  Yang

doi:10.1016/j.jrurstud.2025.103886

Getting money in the country: Is there a liability of rurality facing SMEs?

Marc Cowling, Ross Brown, Weixi Liu, Huan Yang

Research output: Contribution to journal › Article › peer-review

Abstract

This paper examines the loan interest rates offered in rural versus urban locations to test whether a “liability of rurality” confronts rural SMEs. Using a fine grained rural-urban spatial classification system we test whether small firms located across the NUTS 3 areas of England face a rural interest rate “price penalty”. On average rural SMEs take out smaller loans and are less inclined to offer collateral than urban counterparts. Counterintuitively, our key finding is that rural firms benefit from lower average loan interest rates. Regional development funds need to extend their spatial horizons to address their lack of rural outreach.

Original language	English
Article number	103886
Number of pages	12
Journal	Journal of Rural Studies
Volume	120
Early online date	6 Sept 2025
DOIs	https://doi.org/10.1016/j.jrurstud.2025.103886
Publication status	Published - 31 Dec 2025

Data Availability Statement

The authors do not have permission to share data

Funding

The authors wish to acknowledge the funding they received from the ESRC grant number ES /W010259/1. The usual disclaimer applies.

Funders	Funder number
Economic and Social Research Council	ES /W010259/1

Keywords

Interest rates
Loans
Rural
Small firms
Urban

ASJC Scopus subject areas

Geography, Planning and Development
Development
Sociology and Political Science

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10.1016/j.jrurstud.2025.103886Licence: CC BY

Cite this

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AB - This paper examines the loan interest rates offered in rural versus urban locations to test whether a “liability of rurality” confronts rural SMEs. Using a fine grained rural-urban spatial classification system we test whether small firms located across the NUTS 3 areas of England face a rural interest rate “price penalty”. On average rural SMEs take out smaller loans and are less inclined to offer collateral than urban counterparts. Counterintuitively, our key finding is that rural firms benefit from lower average loan interest rates. Regional development funds need to extend their spatial horizons to address their lack of rural outreach.

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Getting money in the country: Is there a liability of rurality facing SMEs?

Abstract

Data Availability Statement

Funding

Keywords

ASJC Scopus subject areas

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