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Direct elicitation of credit constraints: Conceptual and practical issues with an empirical application

Author

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  • Boucher, Stephen R.
  • Guirkinger, Catherine
  • Trivelli, Carolina

Abstract

The "direct" method of evaluating the impact of credit market imperfections on economic performance first attempts to directly measure whether or not a household or firm is credit rationed and then evaluates the impact of the constraint by via a second stage estimation that provides a household-specific measure of the shadow value of capital. We evaluate this direct approach in three steps. First, we present a simple model that allows us to carefully define different notions of credit rationing- via quantity, transaction costs, and risk. Second, we discuss empirical (survey) strategies for classifying the "rationing mechanism" for each household. Finally, we demonstrate the importance of the classification strategy by estimating the impact of household wealth on the probability of non-price rationing for a sample of farm households in Peru.

Suggested Citation

  • Boucher, Stephen R. & Guirkinger, Catherine & Trivelli, Carolina, 2005. "Direct elicitation of credit constraints: Conceptual and practical issues with an empirical application," 2005 Annual meeting, July 24-27, Providence, RI 19272, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19272
    DOI: 10.22004/ag.econ.19272
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    Citations

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    Cited by:

    1. Guirkinger, Catherine, 2008. "Understanding the Coexistence of Formal and Informal Credit Markets in Piura, Peru," World Development, Elsevier, vol. 36(8), pages 1436-1452, August.
    2. Dower, Paul & Potamites, Elizabeth, 2005. "Signaling Credit-Worthiness: Land Titles, Banking Practices and Access to Formal Credit in Indonesia," 2005 Annual meeting, July 24-27, Providence, RI 19120, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Phinseng Channgakham, 2006. "The effects of a fertilizer loan on dry-season rice cultivated areas in Laos," Economics Bulletin, AccessEcon, vol. 15(12), pages 1-8.
    4. Paul Castañeda Dower & Elizabeth Potamites, 2014. "Signalling Creditworthiness: Land Titles, Banking Practices, and Formal Credit In Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 50(3), pages 435-459, December.
    5. repec:ebl:ecbull:v:15:y:2006:i:12:p:1-8 is not listed on IDEAS
    6. Hazel Jean L. Malapit, 2012. "Are Women More Likely to be Credit Constrained? Evidence from Low-Income Urban Households in the Philippines," Feminist Economics, Taylor & Francis Journals, vol. 18(3), pages 81-108, July.
    7. Akram, Waqar & Hussain, Zakir, 2008. "Agricultural credit constraints and borrowing behavior of farmers in rural Punjab," MPRA Paper 31531, University Library of Munich, Germany.
    8. Abbas Ali Chandio & Fayyaz Ahmad & Ghulam Raza Sargani & Asad Amin & Martinson Ankrah Twumasi, 2022. "Analyzing the effective role of formal credit and technological development for rice cultivation," Asia-Pacific Journal of Regional Science, Springer, vol. 6(2), pages 683-711, June.
    9. Daniel Domeher & Raymond Abdulai & Eric Yeboah, 2016. "Secure property right as a determinant of SME’s access to formal credit in Ghana: dynamics between Micro-finance Institutions and Universal Banks," Journal of Property Research, Taylor & Francis Journals, vol. 33(2), pages 162-188, April.
    10. Daniel Domeher & Raymond T., Abdulai, 2012. "Land registration and access to SME credit: preliminary findings," ERES eres2012_002, European Real Estate Society (ERES).

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    Keywords

    Financial Economics;

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