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

Author

Listed:
  • Ciaian, Pavel
  • Fa?kowski, Jan
  • d’Artis, Kanc
  • 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 & 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.
  • Handle: RePEc:eps:fmwppr:99
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    References listed on IDEAS

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    Cited by:

    1. repec:taf:regstd:v:50:y:2016:i:9:p:1579-1594 is not listed on IDEAS
    2. Petrick, Martin & Kloss, Mathias, 2013. "Synthesis Report on the Impact of Capital Use," Factor Markets Working Papers 169, Centre for European Policy Studies.
    3. 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.
    4. Jerzy Michalek & Pavel Ciaian & D'Artis Kancs, 2016. "Investment Crowding Out: Firm-Level Evidence from Northern Germany," Regional Studies, Taylor & Francis Journals, vol. 50(9), pages 1579-1594, September.

    More about this item

    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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