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Productivity and Credit Constraints: Firm-Level Evidence from Propensity Score Matching

Pavel Ciaian, Fa?kowski, Jan, d’Artis, Kanc and Jan Pokrivcak
Authors registered in the RePEc Author Service: d'Artis Kancs

No 99, Factor Markets Working Papers from Centre for European Policy Studies

Abstract: Drawing on a unique, farm-level panel dataset with 37,409 observations and employing a matching estimator, this paper analyses how farm access to credit affects farm input allocation and farm efficiency in the Central and Eastern European 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 €1,000 of additional credit. Our estimates also suggest that farm access to credit increases total factor productivity up to 1.9% per €1,000 of additional credit, indicating that an improvement in access to credit results in an adjustment in 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.

Pages: 29 pages
Date: 2011-09
New Economics Papers: this item is included in nep-agr, nep-eff and nep-tra
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Related works:
Journal Article: Productivity and credit constraints: A firm-level propensity score evidence for agricultural farms in central and east European countries (2012) Downloads
Working Paper: Productivity and Credit Constraints Firm-Level Evidence from Propensity Score Matching (2011) Downloads
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