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

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  • Ciaian, Pavel
  • Fa?kowski, Jan
  • d’Artis, Kanc
  • Pokrivcak, Jan

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.

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Bibliographic Info

Paper provided by Centre for European Policy Studies in its series Factor Markets Working Papers with number 99.

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Length: 29 pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:eps:fmwppr:99

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Cited by:
  1. Petrick, Martin & Kloss, Mathias, 2012. "Drivers of agricultural capital productivity in selected EU member states," Working Papers 132838, Factor Markets, Centre for European Policy Studies.
  2. Petrick, Martin & Kloss, Mathias, 2013. "Synthesis Report on the Impact of Capital Use," Working Papers 157116, Factor Markets, Centre for European Policy Studies.

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