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Productivity and credit constraints: A firm-level propensity score evidence for agricultural farms in central and east European countries

Pavel Ciaian, Jan Falkowski and d'Artis Kancs

Acta Oeconomica, 2012, vol. 62, issue 4, 459-487

Abstract: Drawing on a unique farm level panel data set with 37,409 observations for period 2004–2005 and employing a matching estimator, this paper analyses how farm access to credit affects farm input allocation and farm efficiency in the CEE transition countries. We find that farms are asymmetrically credit constrained with respect to inputs. Farm use of variable inputs and capital investment increases up to 2.3% and 29%, respectively, per 1000 EUR of additional credit. Our estimates suggest also that farm access to credit increases the total factor productivity up to 1.9% per 1000 EUR of additional credit, indicating that an improved access to credit results in adjusting the relative input intensities on farms. This finding is further supported by a negative effect of better access to credit on labour, suggesting that these two are substitutes. Interestingly, farms are found not to be credit constrained with respect to land.

Keywords: access to credit; investment; factor allocation; productivity; farm efficiency; transition countries (search for similar items in EconPapers)
JEL-codes: D14 G21 Q12 P14 (search for similar items in EconPapers)
Date: 2012
Note: The authors are grateful to the Microeconomic Analysis Unit L.3 of the European Commission for granting access to the farm-level FADN data. The authors acknowledge financial support from the European Commission FP7 project “Comparative Analysis of Factor Markets for Agriculture across the Member States”. The views expressed are solely those of the authors and may not in any circumstances be regarded as stating an official position of the European Commission.
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Working Paper: Productivity and Credit Constraints: Firm-Level Evidence from Propensity Score Matching (2011) Downloads
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