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Productivity and Credit Constraints Firm-Level Evidence from Propensity Score Matching

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

Abstract

Drawing on a unique, farm-level panel dataset with 37,409 observations and employing a matching estimator, this paper analyses how farm access to credit affects farm input allocation and farm efficiency in the Central and Eastern European transition countries. We find that farms are asymmetrically credit constrained with respect to inputs. Farm use of variable inputs and capital investment increases up to 2.3% and 29%, respectively, per €1,000 of additional credit. Our estimates also suggest that farm access to credit increases total factor productivity up to 1.9% per €1,000 of additional credit, indicating that an improvement in access to credit results in an adjustment in the relative input intensities on farms. This finding is further supported by a negative effect of better access to credit on labour, suggesting that these two are substitutes. Interestingly, farms are found not to be credit constrained with respect to land.

Suggested Citation

  • Ciaian, Pavel & Falkowski, Jan & Kancs, d'Artis & Pokrivcak, Jan, 2011. "Productivity and Credit Constraints Firm-Level Evidence from Propensity Score Matching," Working papers 117484, Factor Markets, Centre for European Policy Studies.
  • Handle: RePEc:ags:famawp:117484
    DOI: 10.22004/ag.econ.117484
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    Cited by:

    1. Petrick, Martin & Kloss, Mathias, 2012. "Drivers of agricultural capital productivity in selected EU member states," Factor Markets Working Papers 137, Centre for European Policy Studies.
    2. Isaac Tweneboah Asante & Raymond K. Dziwornu & Dadson Awunyo-Vitor, 2020. "Hunger Project credit facility and maize productivity in Ghana," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 10(1), pages 239-258, June.
    3. Marie-Noelle Duquenne & Maria Tsiapa & Valantis Tsiakos, 2019. "Contribution of the Common Agricultural Policy to agricultural productivity of EU regions during 2004–2012 period," Review of Agricultural, Food and Environmental Studies, INRA Department of Economics, vol. 100(1-4), pages 47-68.
    4. Mathias Kloss & Thomas Kirschstein & Steffen Liebscher & Martin Petrick, 2019. "Robust Productivity Analysis: An application to German FADN data," Papers 1902.00678, arXiv.org, revised Feb 2019.
    5. Petrick, Martin & Kloss, Mathias, 2013. "Synthesis Report on the Impact of Capital Use," Factor Markets Working Papers 169, Centre for European Policy Studies.

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    More about this item

    Keywords

    Agricultural and Food Policy; Agricultural Finance; Political Economy;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • 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

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