Signaling is an important element in the lender-borrower relationship that influences the cost and availability of debt capital to agricultural borrowers. This paper analyzes the effects of signaling on farm capital structure in conjunction with the pecking order and trade-off theories. The aggregate estimation indicates that signaling does affect agricultural credit relationships through measures of past cash flow and profitability. High-quality borrowers achieve greater credit capacity by providing lenders with valid signals of their financial status, while adjusting toward target debt levels over time and following the pecking order relationship in the short run.Key Words: farm businesses, pecking order theory, signaling theory, trade-off theorySignaling is an important element in the lender-borrower relationship that directly influences the cost and availability of debt capital to agricultural borrowers. It is based on the premise that lenders prefer to finance higher-quality borrowers with lower credit risk. In determining a borrower's credit capacity, lenders need information that allows them to accurately distinguish between highand low-quality borrowers, thus minimizing adverse selection problems. High-quality borrowers strive to inform lenders of their status by sending credible, unambiguous, and meaningful signals. In contrast, low-quality borrowers are unable to send such signals.Although signaling is a generic strategy applicable to many types of relationships, the signaling instruments for financial relationships rely on measures of strong financial performance (e.g., high profitability and cash flow) that strengthen risk ratings made by financial institutions.The sensitivity of farmers' credit capacity to various financial characteristics and risk management was conceptualized by Baker, empirically tested in several studies, and found to differ significantly among such factors as farmers' use of crop insurance, forward contracting, choice of lender, financing instrument, income variability, asset structure, enterprise mix, and degree of vertical coordination (Barry and Robison). These studies are consistent with the signaling paradigm to various degrees, although Baker's approach was motivated primarily by liquidity considerations, while more recent studies have emphasized agency relationships, asymmetric information, and incentive alignments between borrowers and lenders (Hart; Hubbard; Jensen and Meckling).

This article examines how different patterns of farm-level diversification affect the income levels of rural households in China. Using quantile regression analysis of data from a rural household survey, the empirical results exhibit significant differences in diversification effects across rural income strata and various structural characteristics. Diversification, especially involving nonfarm employment and migration, brings a monetary premium to low-income rural families and an income discount to highincome families. The policy implications suggest the encouragement of labor-intensive enterprises in rural areas and improvement of labor quality through rural education and training programs.Dans le présent article, nous examinons l'influence de divers modèles de diversification des fermes sur le niveau de revenu des ménages ruraux en Chine. Les résultats empiriques de régressions quantiles sur des données issues d'un sondage auprès de ménages ruraux montrent que les effets de la diversification dans toutes les strates de revenus agricoles et les caractéristiques structurelles présentent des différences significatives. La diversification, particulièrement celle qui comprend un emploià l'extérieur de la ferme et la migration, procure un revenu supplémentaire aux familles ruralesà faible revenu et une réduction de revenu aux famillesà revenuélevé. Les implications pour les décideurs consistentà appuyer les entreprisesà forte densité de main-d'oeuvre dans les régions rurales et l'accroissement de la qualité de la main-d'oeuvre grâceà des programmes d'éducation et de formation offerts en milieu rural.

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Many countries have been trying to expand their public health insurance coverage in recent years. To achieve two fundamental policy goals-equity in health care utilization and control of health care costs-policymakers need a better understanding of the underlying determinants of individual health care expenditure beyond the results of mean regressions. In this paper, we apply a quantile regression method to investigate the heterogeneous effects of various determinants of medical expenditure in China. Comparing with the average effects, we find that health care expenditures at the upper end of the distribution are under stronger influences of need factors such as poor health status, and weaker influences of socioeconomic factors and insurance status. On the other hand, health care expenditures at the lower end of the distribution are under stronger influences of socioeconomic factors and insurance status, and weaker influences of need factors. Our study may provide useful information to policymakers for the optimal design of their health care systems, and it may be of particular interests to the health policymakers in China, where is currently still in a period of reshaping its health-care system.

Purpose – The purpose of this paper is to evaluate the effects of access to formal credit on rural household technical efficiency in China. Design/methodology/approach – Based on the rural household survey data in Weifang city, Shandong province in northern China, the authors apply recent developed bootstrapped DEA approach to investigate rural technical efficiency at the household level under the consideration of off-farm activities. Rural households are then identified as credit constrained and classified as supply-side and demand-side credit constraints by applying direct elicitation method. Finally, the authors apply a tobit regression to examine the effects of credit constraints on household technical efficiency. Findings – Rural households in China not only suffer supply-side credit constraints, but also demand-side credit constraints resulted from the transaction costs and risk rationing. The tobit regression discloses that demand-side credit constraints impose significant negative impacts on household technical efficiency. Originality/value – The authors clarify the definition of credit constraints and classify the credit constraints into supply-side and demand-side credit constraints. The results of this paper have significant policy implications for rural finance policies in China.

Th e article investigates the major rural income diversifi cation patterns and their determinants in the context of China. Based on the data from a rural household survey, we fi rst categorize the rural income diversifi cation patterns according to the industry and the location in which the income is generated. Th en we apply a Bayesian multinomial probit model to examine the determinants of various types of the rural income diversifi cation. Th e major results demonstrate that a larger family size stimulates households to undertake various income diversifi cation patterns, but its eff ects are discounted by an unproductive population structure within the household. Another interesting discovery is that a rural household chooses its income diversifi cation pattern by referring to the surrounding neighbourhood; when most farm families depend on off -farm activities to boost their income, the individual household is more likely to follow the surrounding households by participating in the off -farm or mixed income activities or to migrate out to earn its income.

This study investigates rural income diversification measures. Applying rural household survey data in China, we utilize OLS and quantile regression to compare the effects from various rural diversification measures on household income. Our results indicate the high importance of using a two-dimensional rather than a one-dimensional measure of diversification in empirical analyses, at least in the rural China case. Among the two-dimensional indexes, the strong consistency of the quantile patterns between income and diversification, and the plausibility of changes in these relationships, suggest that any one of the diversification measures is acceptable in the relevant studies.

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