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In this paper we estimate the impact of CAP subsidies on farm bank loans. According to the theoreticalresults, if subsidies are paid at the beginning of the growing season they may reduce bank loans, whereas ifthey are paid at the end of the season they increase bank loans, but these results are conditional on creditconstraint and on the relative cost of internal and external financing. In empirical analysis we use the FADNfarm level panel data for period 1995-2007. We employ the fixed effects and the GMM models to estimate theimpact of subsidies on farm loans. The estimated results suggest that (i) subsidies influence farm loans andthe effects tend to be non-linear and indirect; (ii) both coupled and decoupled subsidies stimulate long-termfarm loans, but the long-term loans of big farms increase more than those of small farms due to decoupledsubsidies; (iii) the short-term loans are affected only by decoupled subsidies, and they are altered bydecoupled subsidies more for small farms than for large farms; however (v) when controlling for theendogeneity, only the decoupled payments appear to affect loans and the relationship is non-linear.

Subject(s): Agricultural Finance

Issue Date: 2011

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/114289

Total Pages: 12

Record appears in: European Association of Agricultural Economists (EAAE) > 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland





Autor: Ciaian, Pavel ; Pokrivcak, Jan ; Szegenyova, Katarina

Fuente: http://ageconsearch.umn.edu/record/114289?ln=en







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