Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions
AbstractThis empirical application investigates the eventual presence of credit constraints using a panel of French farmers. This is the first European application using a direct modelling approach based upon axiomatic production theory. The credit constrained profit maximisation model proposed by Färe, Grosskopf and Lee is extended in three ways. First, we rephrase the model in terms of directional distance functions to allow for duality with the profit function. Second, we model the presence of credit constraints in the short-run and investment constraints in the long-run using short- respectively long-run profit functions. Third, we lag the expenditure constraint one year to account for the separation between planning and production. We find empirical evidence of both credit and investment constraints, though their relative impact on the degree of financial inefficiency is rather low in the short-run. Financially unconstrained farmers are larger, perform better, and seem to benefit from a virtuous circle where access to financial markets allows better productive choices. In the long-run, almost all farms seem to suffer from credit constraints for financing their investments.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by IESEG School of Management in its series Working Papers with number 2005-ECO-02.
Length: 43 pages
Date of creation: May 2005
Date of revision:
Publication status: Published in American Journal of Agricultural Economics, May 2006, 88(2), pp. 351-364
proportional distance function; profit function; credit constraint;
Other versions of this item:
- Stéphane Blancard & Jean-Philippe Boussemart & Walter Briec & Kristiaan Kerstens, 2006. "Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 351-364.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
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.:
- Fuss, Melvyn & McFadden, Daniel & Mundlak, Yair, 1978. "A Survey of Functional Forms in the Economic Analysis of Production," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 4 McMaster University Archive for the History of Economic Thought.
- Chavas, Jean-Paul & Aliber, Michael, 1993. "An Analysis Of Economic Efficiency In Agriculture: A Nonparametric Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), July.
- Jean-Bernard Chatelain, 2000. "Explicit Lagrange Multiplier for Firms Facing a Debt Ceiling Constraint," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00119408, HAL.
- Jean-Bernard Chatelain, 2000. "Explicit Lagrange Multiplier for Firms Facing a Debt Ceiling Constraint," Post-Print halshs-00119408, HAL.
- Loren Tauer & Zdenko Stefanides, 1998.
"Success in maximizing profits and reasons for profit deviation on dairy farms,"
Taylor & Francis Journals, vol. 30(2), pages 151-156, February.
- Tauer, Loren W. & Stefanides, Zdenko, 1997. "Success In Maximizing Profits And Reasons For Profit Deviation On Dairy Farms," Working Papers 127823, Cornell University, Department of Applied Economics and Management.
- Tauer, Loren W. & Stefanides, Zdenko, 1997. "Success in Maximizing Profits and Reasons for Profit Deviation on Dairy Farms," Working Papers 127827, Cornell University, Department of Applied Economics and Management.
- TULKENS, Henry & VANDEN EECKAUT, Philippe, 1993.
"Non-Parametric Efficiency, Progress and Regress Measures for Panel Data : Methodological Aspects,"
CORE Discussion Papers
1993016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Tulkens, Henry & Vanden Eeckaut, Philippe, 1995. "Non-parametric efficiency, progress and regress measures for panel data: Methodological aspects," European Journal of Operational Research, Elsevier, vol. 80(3), pages 474-499, February.
- Tulkens, H. & Vanden Eeckaut, P., . "Non-parametric efficiency, progress and regress measures for panel data: Methodological aspects," CORE Discussion Papers RP -1132, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Chavas, Jean-Paul, 2001. "Structural change in agricultural production: Economics, technology and policy," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 5, pages 263-285 Elsevier.
- Petrick, Martin, 2003.
"Empirical measurement of credit rationing in agriculture: a methodological survey,"
IAMO Discussion Papers
45, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
- Martin Petrick, 2005. "Empirical measurement of credit rationing in agriculture: a methodological survey," Agricultural Economics, International Association of Agricultural Economists, vol. 33(2), pages 191-203, 09.
- Battese, George E., 1992. "Frontier production functions and technical efficiency: a survey of empirical applications in agricultural economics," Agricultural Economics, Blackwell, vol. 7(3-4), pages 185-208, October.
- Bernhard Brümmer & Jens-Peter Loy, 2000. "The Technical Efficiency Impact of Farm Credit Programmes: A Case Study of Northern Germany," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(3), pages 405-418.
- Tauer, Loren W. & Kaiser, Harry M., 1988. "Negative Milk Supply Response Under Constrained Profit Maximizing Behavior," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 17(2), October.
- Barry, Peter J. & Robison, Lindon J., 2001. "Agricultural finance: Credit, credit constraints, and consequences," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 10, pages 513-571 Elsevier.
- Sckokai, Paolo & Moro, Daniele, 2002. "Modelling The Cap Arable Crop Regime Under Uncertainty," 2002 Annual meeting, July 28-31, Long Beach, CA 19860, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Chatelain, Jean-Bernard, 2000. "Explicit Lagrange multiplier for firms facing a debt ceiling constraint1," Economics Letters, Elsevier, vol. 67(2), pages 153-158, May.
- Ralph Bierlen & Allen M. Featherstone, 1998. "Fundamental q, Cash Flow, and Investment: Evidence from Farm Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 427-435, August.
- Robert G. Chambers, 2002. "Exact nonradial input, output, and productivity measurement," Economic Theory, Springer, vol. 20(4), pages 751-765.
- Catherine Benjamin & Euan Phimister, 2002. "Does Capital Market Structure Affect Farm Investment? A Comparison using French and British Farm-Level Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1115-1129.
- Schiantarelli, Fabio, 1996. "Financial Constraints and Investment: Methodological Issues and International Evidence," Oxford Review of Economic Policy, Oxford University Press, vol. 12(2), pages 70-89, Summer.
- Schaffer, Mark E., 1998. "Do Firms in Transition Economies Have Soft Budget Constraints? A Reconsideration of Concepts and Evidence," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 80-103, March.
- Oriade, Caleb A. & Dillon, Carl R., 1997. "Developments in biophysical and bioeconomic simulation of agricultural systems: a review," Agricultural Economics, Blackwell, vol. 17(1), pages 45-58, October.
- Kornai, J, 1979. "Resource-Constrained versus Demand-Constrained Systems," Econometrica, Econometric Society, vol. 47(4), pages 801-19, July.
- Ball, V. Eldon & Bureau, Jean-Christophe & Eakin, Kelly & Somwaru, Agapi, 1997. "Cap reform: modelling supply response subject to the land set-aside," Agricultural Economics, Blackwell, vol. 17(2-3), pages 277-288, December.
- de Meza, David & Webb, David C, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 281-92, May.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monika Marin).
If references are entirely missing, you can add them using this form.