Jan Fałkowski () (Faculty of Economic Sciences, University of Warsaw) Pavel Ciaian (European Commission - Joint Research Centre (IPTS), Catholic University of Leuven (LICOS)) d'Artis Kancs (European Commission - Joint Research Centre (IPTS), Catholic University of Leuven (LICOS))
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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.
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Paper provided by Faculty of Economic Sciences, University of Warsaw in its series Working Papers with number
2009-12.
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