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Access to Credit, Factor Allocation and Farm Productivity: Evidence From the CEE Transition Economies

Pavel Ciaian, Jan Falkowski and d'Artis Kancs

No 61347, 114th Seminar, April 15-16, 2010, Berlin, Germany from European Association of Agricultural Economists

Abstract: This paper analyses how farm access to credit affects farm input allocation and farm efficiency in the CEE countries. Drawing on a unique farm level panel data with 37,409 observations and employing a matching estimator we are able to control for the key source of endogeneity – unoberserved heterogeneity. We find that farms are credit constrained both in the short-run as well as in the long-run, but that credit constraint is asymmetric between inputs. Our estimates suggest that farm access to credit increases TFP up to 1.9% per 1000 EUR of additional credit. The use of variable inputs and capital investment increases up to 2.3% and 29%, respectively, per 1000 EUR of additional credit. Due to credit-financed investment in labour-saving farm equipment, labour use reduces for low level of credit Farms are found not to be credit constrained with respect to land.

Keywords: Agricultural and Food Policy; Farm Management; Land Economics/Use (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-eff and nep-tra
Date: 2010-04
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http://ageconsearch.umn.edu/record/61347/files/Cia ... %20Kancs%2061347.pdf (application/pdf)

Related works:
Journal Article: Access to credit, factor allocation and farm productivity: Evidence from the CEE transition economies (2012) Downloads
Working Paper: Access to Credit, Factor Allocation and Farm Productivity: Evidence From the CEE Transition Economies (2009) Downloads
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