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

Jan Falkowski, Pavel Ciaian and d'Artis Kancs

No 2009-12, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: This paper analyses how farm access to credit affects farm input allocation and farm efficiency in the CEE transition 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: access to credit; investment; factor allocation; productivity; transition countries (search for similar items in EconPapers)
JEL-codes: Q12 P14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-eff and nep-tra
Date: 2009
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Downloads: (external link)
http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP22.pdf First version, 2009 (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 (2010) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:war:wpaper:2009-12

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