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Empirical measurement of credit rationing in agriculture: a methodological survey

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Martin Petrick

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Abstract

Empirical analysis of rural credit market failure has been of key scientific and political interest in recent years. The aim of this article is to give an overview of the various methods for measuring credit rationing that are employed in the literature. Furthermore, the methods are subjected to a comparative evaluation of their specific strengths or shortcomings. Six approaches are distinguished: measurement of loan transaction costs, analysis of qualitative information collected in interviews, analysis of quantitative information collected in interviews using the credit limit concept, analysis of spill-over effects with regard to secondary credit sources, econometric household modeling, and the econometric analysis of dynamic investment decisions. An explicit comparison with a first-best solution is impossible in the first three approaches, since they essentially rely on a subjective assessment of borrowers' access to credit, based on qualitative or quantitative indicators. The fifth and sixth approaches allow a rigorous interpretation in the framework of neoclassical equilibrium theory. The fourth approach takes an intermediate position, since spill-over on segmented loan markets reveals a willingness to pay with regard to the supposedly less expensive but rationed primary source. The approaches are fairly data demanding in general, usually requiring specific data on loan transactions. Even so, most approaches are applicable to cross-sectional household data. With the exception of the first, all methods surveyed might plausibly be used to empirically detect credit rationing. Copyright 2005 International Association of Agricultural Economics.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1574-0862.2005.00384.x
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Article provided by International Association of Agricultural Economists in its journal Agricultural Economics.

Volume (Year): 33 (2005)
Issue (Month): 2 (09)
Pages: 191-203
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Handle: RePEc:bla:agecon:v:33:y:2005:i:2:p:191-203

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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  26. Hoff, Karla & Stiglitz, Joseph E, 1990. "Imperfect Information and Rural Credit Markets--Puzzles and Policy Perspectives," World Bank Economic Review, Oxford University Press, vol. 4(3), pages 235-50, September.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stéphane Blancard & Jean-Philippe Boussemart & Walter Briec & Kristiaan Kerstens, 2005. "Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions," Working Papers 2005-ECO-02, IESEG School of Management. [Downloadable!]
  2. Jingping Gu & Paula Hernandez-Verme, . "A Semiparametric Time Trend Varying Coefficients Model: With An Application to Evaluate Credit Rationing in U.S. Credit Market," School of Economics Working Papers EM200902, Universidad de Guanajuato. [Downloadable!]
  3. Blancard, S. & Boussemart, J.P. & Briec, W. & Kerstens, K., 2008. "Technology Adoption in French Agriculture and the Role of Financial Constraints," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44160, European Association of Agricultural Economists. [Downloadable!]
  4. Guirkinger, Catherine & Boucher, Steve, 2007. "Credit Constraints and Productivity in Peruvian Agriculture," Working Papers 6882, University of California, Davis, Department of Agricultural and Resource Economics. [Downloadable!]
  5. Petrick, Martin & Latruffe, Laure, 2003. "Credit Access And Borrowing Costs In Poland'S Agricultural Credit Market: A Hedonic Pricing Approach," IAMO Discussion Papers 14905, Institute of Agricultural Development in Central and Eastern Europe (IAMO). [Downloadable!]
  6. Petrick, Martin & Latruffe, Laure, 2005. "The Determinants of Polish Farmers' Credit Interest Rates: Hedonic Price Analysis and Implications for Government Policy," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24757, European Association of Agricultural Economists. [Downloadable!]
  7. David W. Mushinski & Kathleen A. Pickering, 2007. "Heterogeneity in informal sector mitigation of micro-enterprise credit rationing," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(5), pages 567-581. [Downloadable!]
  8. Mikkel Barslund & Finn Tarp, 2007. "Formal and Informal Rural Credit in Four Provinces of Vietnam," Discussion Papers 07-07, University of Copenhagen. Department of Economics. [Downloadable!]
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