Do agricultural subsidies crowd out or stimulate rural credit market institutions? The case of EU common agricultural policy

Resource Information

The work Do agricultural subsidies crowd out or stimulate rural credit market institutions? The case of EU common agricultural policy represents a distinct intellectual or artistic creation found in European University Institute Library. This resource is a combination of several types including: Work, Language Material, Books.

Label

Do agricultural subsidies crowd out or stimulate rural credit market institutions? The case of EU common agricultural policy

Statement of responsibility

Pavel Ciaian

Creator

• Ciaian, Pavel

Contributor

• Pokrivcak, Jan
• European Community Studies Association-Austria
• Szegenyova, Katarina

Author

• Pokrivcak, Jan
• Szegenyova, Katarina

Subject

• Agriculture and state -- European Union countries
• Agricultural subsidies -- European Union countries
• Agriculture -- Economic aspects -- European Union countries
• Common agricultural policy -- European Union countries

Language

eng

Summary

In this paper we estimate the impact of agricultural subsidies granted under the European Union's Common Agricultural Policy (CAP) on bank loans extended to farms. According to our theoretical analysis, subsidies may either stimulate or crowd out bank loans depending on the timing of subsidies, severity of credit constraint, type of subsidies and bank loans, and the relative cost of internal and external financing. In empirical analysis we use the Farm Accountancy Data Network (FADN) farm level panel data for the period 1995-2007. We employ the fixed effects and generalised method of moment (GMM) models. The estimated results suggest that (i) big farms tend to use subsidies to increase long-term loans, whereas small farms tend to use subsidies to obtain short-term loans; (ii) subsidies tend to crowd out short-term loans for big farms and long-term loans for small farms; (iii) when controlling for the endogeneity, the crowding out effect becomes smaller, but the positive causal effect of subsidies on bank loans remains significant

Cataloging source

FIE

Index

no index present

Literary form

non fiction

Nature of contents

dictionaries

Series statement

European integration online papers

Series volume

vol. 16 (2012), article 15