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

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.

FALKOWSKI Jan;  CIAIAN Pavel;  KANCS D'Artis; 

2010-08-11

SiAg - DFG-Research Unit Structural Change in Agriculture

JRC58599

http://www.eaae114.hu-berlin.de/program?switchLanguage&set_language=en,    https://publications.jrc.ec.europa.eu/repository/handle/JRC58599,