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Credit Constraints: Their Existence, Determinants, and Implications for U.S. Farm and Nonfarm Sole Proprietorships

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  • Charles A. Towe
  • Mitchell J. Morehart

Abstract

The objective of this study is to determine the effect of credit constraints on production for farm and nonfarm sole proprietorships. A propensity score-matching estimator is employed to provide unbiased estimates of the production impacts of being denied credit. The empirical results demonstrate that the value of production is significantly lower for credit-constrained sole proprietorships. If this drop in the value of production is aggregated to a national level, it constitutes only 3% and 13% of total value of production for farm and nonfarm sole proprietorships, respectively. Copyright 2009, Oxford University Press.

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  • Charles A. Towe & Mitchell J. Morehart, 2009. "Credit Constraints: Their Existence, Determinants, and Implications for U.S. Farm and Nonfarm Sole Proprietorships," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 275-289.
  • Handle: RePEc:oup:ajagec:v:91:y:2009:i:1:p:275-289
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2008.01173.x
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