Letcher County Culture Hub: Impact on Borrowing and Financing Power

Despite the tight-knit and trust-abundant nature of rural America, traditional financial institutions are largely unable to trust communities with funding, especially without traditional measures like credit score checks, which rural communities are disproportionately excluded from demonstrating.

International efforts under the umbrella of microfinance have attempted to generate alternative solutions to ”the trust problem” for rural communities, the most notable of those alternatives being group lending. However, research results on group lending are ambivalent, leaving room for future alternatives.

Examining Appalachian Kentucky affords the opportunity to see what one community is doing to combat the issue. The Letcher County Culture Hub offers a potential model against community disinvestment. Its core purpose is to advance culture in a collaborative manner. However, the hub has found success in garnering lending and grant investments by positioning itself as a group where members are capable and committed to collaborative initiatives. I utilize several long-form interviews and a simple signaling model to argue that such a strategy aligns with the incentives of both the community, and prospective lenders and grantmakers. Then, I examine the core tradeoff that could arise with any community looking to position itself similarly, that being the substantive time and effort investment for its members.

I ultimately argue that the Culture Hub can function as a model for communities looking to formalize their trust and signal their credibility, as a step toward relieving rural communities of their empirical disinvestment.