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This paper analyses how farm access to credit affects farm input allocation and farmefficiency in the CEE countries. Drawing on a unique farm level panel data with 37,409observations and employing a matching estimator we are able to control for the keysource of endogeneity – unoberserved heterogeneity. We find that farms are creditconstrained both in the short-run as well as in the long-run, but that credit constraint is asymmetric between inputs. Our estimates suggest that farm access to credit increasesTFP up to 1.9% per 1000 EUR of additional credit. The use of variable inputs and capital investment increases up to 2.3% and 29%, respectively, per 1000 EUR of additionalcredit. Due to credit-financed investment in labour-saving farm equipment, labour usereduces for low level of credit Farms are found not to be credit constrained with respectto land.
