Title: Access to Credit, Factor Allocation and Farm Productivity: Evidence From the CEE Transition Economies
Citation: Working Papers, Faculty of Economic Sciences no. 12 p. 1-31
Publisher: University of Warsaw
Publication Year: 2009
JRC N°: JRC55562
URI: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP22.pdf
Type: Articles in periodicals and books
Abstract: This paper analyses how farm access to credit affects farm input allocation and farm efficiency in the CEE transition 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.
JRC Directorate:Growth and Innovation

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