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Productivity and credit constraints: A firm-level propensity score evidence for agricultural farms in central and east European countries

Author

Listed:
  • Pavel Ciaian

    () (European Commission, (DG JRC) Edificio Expo C/Inca Garcilaso 3, 41092 Seville, Spain)

  • Jan Fałkowski

    () (European Commission, (DG JRC) Edificio Expo C/Inca Garcilaso 3, 41092 Seville, Spain)

  • D’Artis Kancs

    (European Commission, (DG JRC) Edificio Expo C/Inca Garcilaso 3, 41092 Seville, Spain)

Abstract

Drawing on a unique farm level panel data set with 37,409 observations for period 2004–2005 and employing a matching estimator, this paper analyses how farm access to credit affects farm input allocation and farm efficiency in the CEE 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 1000 EUR of additional credit. Our estimates suggest also that farm access to credit increases the total factor productivity up to 1.9% per 1000 EUR of additional credit, indicating that an improved access to credit results in adjusting 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.

Suggested Citation

  • Pavel Ciaian & Jan Fałkowski & D’Artis Kancs, 2012. "Productivity and credit constraints: A firm-level propensity score evidence for agricultural farms in central and east European countries," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 62(4), pages 459-487, December.
  • Handle: RePEc:aka:aoecon:v:62:y:2012:i:4:p:459-487
    Note: The authors are grateful to the Microeconomic Analysis Unit L.3 of the European Commission for granting access to the farm-level FADN data. The authors acknowledge financial support from the European Commission FP7 project “Comparative Analysis of Factor Markets for Agriculture across the Member States”. The views expressed are solely those of the authors and may not in any circumstances be regarded as stating an official position of the European Commission.
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    Citations

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    Cited by:

    1. Jerzy Michalek & Pavel Ciaian & D'Artis Kancs, 2016. "Investment Crowding Out: Firm-Level Evidence from Northern Germany," Regional Studies, Taylor & Francis Journals, vol. 50(9), pages 1579-1594, September.
    2. 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.
    3. Petrick, Martin & Kloss, Mathias, 2013. "Synthesis Report on the Impact of Capital Use," Factor Markets Working Papers 169, Centre for European Policy Studies.

    More about this item

    Keywords

    access to credit; investment; factor allocation; productivity; farm efficiency; transition countries;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • P14 - Economic Systems - - Capitalist Systems - - - Property Rights

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