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Investment and Financial Constraints in European Agriculture: Evidence from France, Hungary and Slovenia

  • Ferto, Imre
  • Bakucs, Lajos Zoltan
  • Bojnec, Stefan
  • Latruffe, Laure

The article investigates the investment and financial constraints for French, Hungarian and Slovenian farms using FADN panel data with different econometric estimation approaches. Farm gross investment is positively associated with real sales growth and cash flow implying the absence of soft budget constraint. Gross farm investment is positively associated with investment subsidies. Specific results by country are found depending on farm indebtedness. Investment subsidies can mitigate some capital market imperfections in short-term, while on long-term what is crucial is farm sale ability to successfully compete in the output market gaining sufficient cash flow for farm competitive survival and investment.

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File URL: http://purl.umn.edu/114357
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Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114357.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:114357
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  1. Catherine Benjamin & Euan Phimister, 2002. "Does Capital Market Structure Affect Farm Investment? A Comparison using French and British Farm-Level Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1115-1129.
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  3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  4. Laure Latruffe & Sophia Davidova & Elodie Douarin & Matthew Gorton, 2008. "Farm expansion in Lithuania after accession to the EU: The role of CAP payments in alleviating potential credit constraints," Working Papers SMART - LERECO 08-06, INRA UMR SMART.
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  6. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
  7. Bakucs, Lajos Zoltán & Ferto, Imre & Fogarasi, József, 2009. "Investment and financial constraints in Hungarian agriculture," Economics Letters, Elsevier, vol. 104(3), pages 122-124, September.
  8. Bruno, Giovanni S.F., 2005. "Approximating the bias of the LSDV estimator for dynamic unbalanced panel data models," Economics Letters, Elsevier, vol. 87(3), pages 361-366, June.
  9. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  10. J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 11.
  11. Lubomir Lizal & Jan Svejnar, 2001. "Investment, Credit Rationing and the Soft Budget Constraint: Evidence from Czech Panel Data," William Davidson Institute Working Papers Series 363, William Davidson Institute at the University of Michigan.
  12. Budina, Nina & Garretsen, Harry & de Jong, Elke, 2000. "Liquidity constraints and investment in transition economies - the case of Bulgaria," Policy Research Working Paper Series 2278, The World Bank.
  13. Konings, Jozef & Rizov, Marian & Vandenbussche, Hylke, 2003. "Investment and financial constraints in transition economies: micro evidence from Poland, the Czech Republic, Bulgaria and Romania," Economics Letters, Elsevier, vol. 78(2), pages 253-258, February.
  14. Petrick, Martin, 2004. "Farm investment, credit rationing, and governmentally promoted credit access in Poland: a cross-sectional analysis," Food Policy, Elsevier, vol. 29(3), pages 275-294, June.
  15. Piet, Laurent & Desjeux, Yann & Latruffe, Laure & Le Mouel, Chantal, 2010. "How do agricultural policies influence farmland concentration? The example of France," 114th Seminar, April 15-16, 2010, Berlin, Germany 61349, European Association of Agricultural Economists.
  16. Giovanni S.F. Bruno, 2005. "Estimation and inference in dynamic unbalanced panel data models with a small number of individuals," KITeS Working Papers 165, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jun 2005.
  17. 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.
  18. Rizov, Marian & Gavrilescu, Dinu & Gow, Hamish & Mathijs, Erik & Swinnen, Johan F. M., 2001. "Transition and Enterprise Restructuring: The Development of Individual Farming in Romania," World Development, Elsevier, vol. 29(7), pages 1257-1274, July.
  19. Bojnec, Stefan & Latruffe, Laure, 2007. "Investment of Slovenian farms in the transition context," 104th Seminar, September 5-8, 2007, Budapest, Hungary 7827, European Association of Agricultural Economists.
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