Credit constraints and productivity in Peruvian agriculture
This article evaluates the performance of a rural credit market in Peru. We develop a model that shows that collateral requirements imposed by lenders in response to asymmetric information can lead not just to quantity rationing but also to transaction cost rationing and risk rationing. Just like qu...
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Published in | Agricultural economics Vol. 39; no. 3; pp. 295 - 308 |
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Main Authors | , |
Format | Journal Article |
Language | English |
Published |
Malden, USA
Blackwell Publishing Inc
01.11.2008
International Association of Agricultural Economists |
Series | Agricultural Economics |
Subjects | |
Online Access | Get full text |
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Summary: | This article evaluates the performance of a rural credit market in Peru. We develop a model that shows that collateral requirements imposed by lenders in response to asymmetric information can lead not just to quantity rationing but also to transaction cost rationing and risk rationing. Just like quantity rationing, these two additional forms of nonprice rationing adversely affect farm resource allocation and productivity. We test the insights of the model using a panel data set from Northern Peru. We estimate the returns to productive endowments for constrained and unconstrained households using a switching regression model. We find that, consistent with the theory, productivity is independent of endowments for unconstrained households but is tightly linked to endowments for constrained households. We estimate that credit constraints lower the value of agricultural output in the study region by 26%. |
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Bibliography: | http://dx.doi.org/10.1111/j.1574-0862.2008.00334.x istex:CDC001C356AF025123537FA09F41D81C69C366F3 ark:/67375/WNG-VQ611PQM-M ArticleID:AGEC334 Data Appendix Available Online (this link will take you to the article abstract). Please note: Blackwell Publishing is not responsible for the content or functionality of any supplementary materials supplied by the authors. Any queries (other than missing material) should be directed to the corresponding author for the article. http://www.blackwell‐synergy.com A data appendix to replicate main results is available as part of the online article from ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23 |
ISSN: | 0169-5150 1574-0862 |
DOI: | 10.1111/j.1574-0862.2008.00334.x |