Impact of credit constraints on profitability and productivity in U.S. agriculture

Darlington Sabasi and Lyudmyla Kompaniyets

No 205689, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: This study examines industry-level impacts of possible credit constraints on farm profitability and productivity. We theoretically show that binding credit-constraints negatively affects profits as they inhibit acquisition of the optimal scale and mix of inputs for profit maximization. However, the impact of credit constraints on productivity is ambiguous and depends on the farm’s production region (IRS or DRS). Empirically, current debt-to-asset ratio has a positive effect on TFP and a negative effect on profit.

Keywords: Agricultural and Food Policy; Agricultural Finance; Production Economics; Productivity Analysis (search for similar items in EconPapers)
Pages: 24
Date: 2015-05-27
New Economics Papers: this item is included in nep-agr and nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:205689

DOI: 10.22004/ag.econ.205689

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