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Access to Credit, Factor Allocation and Farm Productivity: Evidence From the CEE Transition Economies

  • Ciaian, Pavel
  • Falkowski, Jan
  • Kancs, d'Artis

This paper analyses how farm access to credit affects farm input allocation and farm efficiency in the CEE 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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File URL: http://purl.umn.edu/61347
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Paper provided by European Association of Agricultural Economists in its series 114th Seminar, April 15-16, 2010, Berlin, Germany with number 61347.

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Date of creation: Apr 2010
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Handle: RePEc:ags:eaa114:61347
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