Credit Access: Implications for Sole-Proprietor Household Production

The objective of this study is to explain the determinants of farm and non-farm sole proprietorship households access to credit as well as the extent their credit constraints impact their value of production. A propensity, kernel-based matching estimator was employed to provide unbiased estimates of the production impacts of being denied credit. Prior research efforts have used inferior methods, including the two-stage Heckman estimator deal with estimation issues (selection bias and endogeneity) inherent in determining impacts of credit access and use. Results suggest that credit constrained sole-proprietorships, farm and non-farm, have a significantly lower value of production, but this drop in production, when aggregated to a national level, is small.

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Selected Paper 174722

 Record created 2017-04-01, last modified 2018-01-22

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