IDEAS home Printed from https://ideas.repec.org/p/ags/eaa114/61347.html
   My bibliography  Save this paper

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

Author

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

Abstract

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.

Suggested Citation

  • Ciaian, Pavel & Falkowski, Jan & Kancs, d'Artis, 2010. "Access to Credit, Factor Allocation and Farm Productivity: Evidence From the CEE Transition Economies," 114th Seminar, April 15-16, 2010, Berlin, Germany 61347, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa114:61347
    DOI: 10.22004/ag.econ.61347
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/61347/files/Ciaian%20Falkowski%20Kancs%2061347.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.61347?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Barry, Peter J. & Robison, Lindon J., 2001. "Agricultural finance: Credit, credit constraints, and consequences," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 10, pages 513-571, Elsevier.
    2. Laure Latruffe & Sophia Davidova & Elodie Douarin & Matthew Gorton, 2010. "Farm Expansion in Lithuania after Accession to the EU: The Role of CAP Payments in Alleviating Potential Credit Constraints," Europe-Asia Studies, Taylor & Francis Journals, vol. 62(2), pages 351-365.
    3. Michael R. Carter & Pedro Olinto, 2003. "Getting Institutions “Right” for Whom? Credit Constraints and the Impact of Property Rights on the Quantity and Composition of Investment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 173-186.
    4. Laure Latruffe, 2005. "The Impact of Credit Market Imperfections on Farm Investment in Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 17(3), pages 349-362.
    5. Pavel Ciaian & d’Artis Kancs, 2012. "The Capitalization of Area Payments into Farmland Rents: Micro Evidence from the New EU Member States," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 60(4), pages 517-540, December.
    6. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 605-654.
    7. Martin Petrick, 2004. "A microeconometric analysis of credit rationing in the Polish farm sector," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(1), pages 77-101, March.
    8. Stéphane Blancard & Jean-Philippe Boussemart & Walter Briec & Kristiaan Kerstens, 2006. "Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 351-364.
    9. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    10. Pavel Ciaian & Johan F.M. Swinnen, 2009. "Credit Market Imperfections and the Distribution of Policy Rents," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1124-1139.
    11. Feder, Gershon & Lau, Lawrence J. & Lin, Justin Y. & Xiaopeng Luo, 1991. "Credit's effect on productivity in Chinese agriculture : a microeconomic model of disequilibrium," Policy Research Working Paper Series 571, The World Bank.
    12. Dabalen, Andrew & Paternostro, Stefano & Pierre, Gaelle, 2004. "The returns to participation in the non-farm sector in rural Rwanda," Policy Research Working Paper Series 3462, The World Bank.
    13. Dries, Liesbeth & Swinnen, Johan F. M., 2004. "Foreign Direct Investment, Vertical Integration, and Local Suppliers: Evidence from the Polish Dairy Sector," World Development, Elsevier, vol. 32(9), pages 1525-1544, September.
    14. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
    15. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    16. Key, Nigel D. & Roberts, Robert J., 2008. "Do Decoupled Payments Stimulate Production? Estimating the Effect on Program Crop Acreage Using Matching," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6072, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. 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.
    18. Antonio Bento & Charles Towe & Jacqueline Geoghegan, 2007. "The Effects of Moratoria on Residential Development: Evidence from a Matching Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(5), pages 1211-1218.
    19. Feder, Gershon, 1985. "The relation between farm size and farm productivity : The role of family labor, supervision and credit constraints," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 297-313, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Witte, Taylor & DeVuyst, Eric & Whitacre, Brian & Jones, Rodney, 2015. "Determining the Impact of a New Farm Credit Branch in East Central Oklahoma," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196674, Southern Agricultural Economics Association.
    2. Unal Seven & Semih Tumen, 2020. "Agricultural Credits And Agricultural Productivity: Cross-Country Evidence," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(supp01), pages 161-183, December.
    3. Liqiong Lin & Weizhuo Wang & Christopher Gan & Quang T. T. Nguyen, 2019. "Credit Constraints on Farm Household Welfare in Rural China: Evidence from Fujian Province," Sustainability, MDPI, Open Access Journal, vol. 11(11), pages 1-19, June.
    4. Kata, Ryszard & Walenia, Alina, 2015. "Financial Exclusion Of Farmers And Rural Entrepreneurs," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 2015(36).
    5. Jarko Fidrmuc & Pavel Ciaian & d'Artis Kancs & Jan Pokrivcak, 2013. "Credit Constraints, Heterogeneous Firms and Loan Defaults," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 53-68, May.
    6. Tomas Baležentis & Aistė Galnaitytė & Irena Kriščiukaitienė & Virginia Namiotko & Lina Novickytė & Dalia Streimikiene & Rasa Melnikiene, 2019. "Decomposing Dynamics in the Farm Profitability: An Application of Index Decomposition Analysis to Lithuanian FADN Sample," Sustainability, MDPI, Open Access Journal, vol. 11(10), pages 1-15, May.
    7. Liqiong Lin & Weizhuo Wang & Christopher Gan & David A. Cohen & Quang T.T Nguyen, 2019. "Rural Credit Constraint and Informal Rural Credit Accessibility in China," Sustainability, MDPI, Open Access Journal, vol. 11(7), pages 1-20, April.
    8. Juan José Echavarría, 2018. "Impacto del crédito sobre el agro en Colombia: evidencia del nuevo Censo nacional agropecuario," Chapters, in: Mauricio Villamizar-Villegas & Sara Restrepo-Tamayo & Juan David Hernández-Leal (ed.), Superando barreras: el impacto del crédito en el sector agrario en Colombia, chapter 2, pages 41-72, Banco de la Republica de Colombia.
    9. Demirdogen, Alper & Olhan, Emine, 2018. "The Timing Impact of Agricultural Support Policies on Farmers’ Stated Intentions in Turkey," 162nd Seminar, April 26-27, 2018, Budapest, Hungary 271960, European Association of Agricultural Economists.
    10. Ciaian, Pavel & Kancs, d'Artis, 2011. "The Impact of Market Imperfections on Heterogeneous Firm Output, Productivity, and Profit," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 39(1), pages 1-24.
    11. Eusébio, Gabriela Dos Santos & Gori-Maia, Alexandre & Silveira, Rodrigo Lanna F., 2017. "Measuring the Farm Level Impact of Rural Credit: A Two-stage Approach," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258551, Agricultural and Applied Economics Association.
    12. Harianto Harianto & M. Parulian Hutagaol & Iman Widhiyanto, 2019. "Sources and Effects of Credit Accessibility on Smallholder Paddy Farms Performance: An Empirical Analysis of Government Subsidized Credit Program in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 9(5), pages 1-10.
    13. Ciaian, Pavel & Pokrivcak, Jan and Katarina Szegenyova, 2012. "Do agricultural subsidies crowd out or stimulate rural credit market institutions? The case of EU Common Agricultural Policy," European Integration online Papers (EIoP), European Community Studies Association Austria (ECSA-A), vol. 16, November.
    14. Turvey, C. G., 2017. "IFAD RESEARCH SERIES 10 - Inclusive finance and inclusive rural transformation," IFAD Research Series 280048, International Fund for Agricultural Development (IFAD).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Ciaian, Pavel & Fa?kowski, Jan & d’Artis, Kanc & Pokrivcak, Jan, 2011. "Productivity and Credit Constraints: Firm-Level Evidence from Propensity Score Matching," Factor Markets Working Papers 99, Centre for European Policy Studies.
    3. Pavel Ciaian & d’Artis Kancs, 2011. "The Impact Of Food Price Shock On Heterogeneous Credit Constrained Firms," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 82(2), pages 115-137, June.
    4. Ciaian, Pavel & Pokrivcak, Jan, 2011. "Do agricultural subsidies crowd out or stimulate rural credit institutions? The Case of CAP Payments," Working papers 117485, Factor Markets, Centre for European Policy Studies.
    5. Olper, Alessandro & Falkowski, Jan & Swinnen, Johan F.M., 2009. "Democracy and Agricultural Protection: Parametric and Semi-parametric Matching Estimates," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49313, Agricultural and Applied Economics Association.
    6. Van Herck, Kristine & Vranken, Liesbet, 2012. "Direct Payments and Land Rents: Evidence from New Member States," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126777, International Association of Agricultural Economists.
    7. Pavel Ciaian & d'Artis Kancs & Jo Swinnen, 2008. "Static and Dynamic Distributional Effects of Decoupled Payments," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 51(2), pages 20-47.
    8. Kandilov, Amy M.G. & Kandilov, Ivan T., 2013. "The Impact of Interstate Bank Branching Deregulations on the U.S. Agricultural Sector: From Better Access to Credit to Higher Farm Sales and Profits," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149820, Agricultural and Applied Economics Association.
    9. Falkowski, Jan, 2013. "Does it matter how much land your neighbour owns? The functioning of land markets in Poland from a social comparison perspective," Factor Markets Working Papers 171, Centre for European Policy Studies.
    10. Diana Fletschner & Catherine Guirkinger & Steve Boucher, 2010. "Risk, Credit Constraints and Financial Efficiency in Peruvian Agriculture," Journal of Development Studies, Taylor & Francis Journals, vol. 46(6), pages 981-1002.
    11. Dries, Liesbeth & Swinnen, Johan F.M., 2010. "The impact of interfirm relationships on investment: Evidence from the Polish dairy sector," Food Policy, Elsevier, vol. 35(2), pages 121-129, April.
    12. Sabasi, Darlington & Kompaniyets, Lyudmyla, 2015. "Impact of credit constraints on profitability and productivity in U.S. agriculture," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205689, Agricultural and Applied Economics Association.
    13. Marian Rizov & Jan Pokrivcak & Pavel Ciaian, 2013. "CAP Subsidies and Productivity of the EU Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(3), pages 537-557, September.
    14. 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.
    15. Pavel Ciaian & Johan F.M. Swinnen, 2007. "Credit Market Imperfections and the Distribution of Policy Rents: The Common Agricultural Policy in the New EU Member States," LICOS Discussion Papers 18307, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    16. Zier, Patrick, 2013. "Econometric impact assessment of the Common Agricultural Policy in East German agriculture," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 71, number 71, June.
    17. Sergio Salis, 2006. "Evaluating the Causal Effect of Foreign Acquisition on Domestic Performances: The Case of Slovenian Manufacturing Firms," William Davidson Institute Working Papers Series wp803, William Davidson Institute at the University of Michigan.
    18. Yasuyuki Todo & Tomohiko Inui & Yuan Yuan, 2014. "Effects of Privatization on Exporting Decisions: Firm-level Evidence from Chinese State-owned Enterprises," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 56(4), pages 536-555, December.
    19. Jan Fałkowski & Maciej Jakubowski & Paweł Strawiński, 2014. "Returns from income strategies in rural Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 22(1), pages 139-178, January.

    More about this item

    Keywords

    Agricultural and Food Policy; Farm Management; Land Economics/Use;
    All these keywords.

    JEL classification:

    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:eaa114:61347. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/eaaeeea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.