Direct elicitation of credit constraints: Conceptual and practical issues with an empirical application

The "direct" method of evaluating the impact of credit market imperfections on economic performance first attempts to directly measure whether or not a household or firm is credit rationed and then evaluates the impact of the constraint by via a second stage estimation that provides a household-specific measure of the shadow value of capital. We evaluate this direct approach in three steps. First, we present a simple model that allows us to carefully define different notions of credit rationing- via quantity, transaction costs, and risk. Second, we discuss empirical (survey) strategies for classifying the "rationing mechanism" for each household. Finally, we demonstrate the importance of the classification strategy by estimating the impact of household wealth on the probability of non-price rationing for a sample of farm households in Peru.


Issue Date:
2005
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/19272
Total Pages:
37
Note:
Replaced with revised version of paper 08/03/05.
Series Statement:
Selected Paper 136998




 Record created 2017-04-01, last modified 2017-08-24

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