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The role of credit rationing in Czech agriculture - the case of large agricultural enterprises

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  • L. Čechura

    (Czech University of Agriculture, Prague, Czech Republic)

Abstract

The article is concerned with the analysis of the role of credit rationing in Czech agriculture on the case of large agricultural enterprises. The part of results, first presents the author's derivation of the theoretical model (model CR-AS), which represents a good tool (approach) for the analysis of credit rationing on sector level. Second, the focus on large agricultural enterprises and relevant characteristic of agriculture ask for a small adjustment of the derived model CR-AS in the part of model application. Third, the adjusted model is expressed numerically by the employment of econometric methodology. The estimation of the model is made per partes. The co-integration is used for fitting the Cobb-Douglas production function, which embodies the long run production characteristics of large agricultural enterprises. The CRDcurve is derived based on the stability assumption of the production function that is essential considering the recursive nature of the model. Finally, the specified model is employed in the ex-post analysis of the impact of credit rationing on production level of large agricultural enterprises. The outputs of the analysis suggest that, in average, the group of large agricultural enterprises might not be directly influenced by possible presence of credit rationing on the agricultural loan market. Nevertheless, that might not be the case of small and middle enterprises. The analysis continues with the investigation of possible meeting of credit rationing within both the group of large agricultural enterprises and the group of small and middle enterprises and stresses his implications. Furthermore, the role of the PGRLF (Support and Guarantee Farm and Forestry Fund) is analysed and discussed on the subject of reduction of credit rationing phenomena on the agricultural loan market.

Suggested Citation

  • L. Čechura, 2006. "The role of credit rationing in Czech agriculture - the case of large agricultural enterprises," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 52(10), pages 477-488.
    • Handle: RePEc:caa:jnlage:v:52:y:2006:i:10:id:5054-agricecon
    DOI: 10.17221/5054-AGRICECON
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    References listed on IDEAS

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    1. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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    Cited by:

    1. L. Čechura, 2008. "Theoretical-empirical analysis of the role of the SGAFF in financing of farmers' activities," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 54(10), pages 476-488.
    2. L. Čechura, 2009. "The impact of credit rationing on farmer's economic equilibrium," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 55(11), pages 541-549.

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