Do formal credit constraints affect the rural household consumption in China?

Zhao, Jianmei; Zhang, Jun; Barry, Peter J.

doi:10.17221/161/2013-agricecon

Cited by 4 publications

(3 citation statements)

References 22 publications

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“…In the light of previous studies conducted by Zhao et al (2014), andBoucher et al (2009), we utilized the following consequences to identify the credit-constrained status of farmers: i. A farmer's credit application refused by the formal credit organization is measured as total quantity rationing.…”

Section: Identification Of Credit Constraintsmentioning

confidence: 99%

Credit constraints and rural farmers’ welfare in an agrarian economy

Amanullah

Lakhan

Channa

et al. 2020

Heliyon

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This study aims to determine the impact of credit constraints on wheat farmers' welfare. For this study, data on 575 wheat farmers were collected through a simple random sampling technique. The treatment-effect model was used to find the effect of credit constraints on the farmers' welfare. In addition, to control for the problem of endogeneity, ordinary least squares and logistic regressions were employed. Farmers' welfare was measured by as consumption. The results show that constrained farmers cultivate 2.8–4.1% more area of land than unconstrained farmers but that the spending and income per capita of credit-constrained farmers are 18.9 to 13.8% lower, respectivley, than those of unconstrained farmers. Moreover, the results indicate that the welfare and income of credit-constrained farmers are influenced by age, the interest rate, area of land, and family size. An increase in the area of land enhances wellbeing and returns for the constrained farmer, which is in contrast to the unconstrained farmer. The results show that credit constraints have a negative impact on farmers' welfare and income. Better welfare may only be achieved if credit is supplied to credit-constrained farmers. Furthermore, this study has potentially significant implications. First, the negative impact of the interest rate suggests that the State Bank of Pakistan should modify agricultural credit policies, particularly to design a flexible interest rate for farmers. Second, the central bank should amend the agricultural credit limits based on the current financial needs of the agricultural market when the rate of inflation is high and the impact of agricultural crises is long and drawn-out. Third, the government should launch an agricultural Islamic bank in the study area. This Islamic bank would support religious farmers who are constrained due to objections to interest, and it would relax the farmers’ credit constraints as well as help them to increase welfare and income.

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Section: Identification Of Credit Constraintsmentioning

confidence: 99%

Credit constraints and rural farmers’ welfare in an agrarian economy

Amanullah

Lakhan

Channa

et al. 2020

Heliyon

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“…Figure 1 shows an algorithm for identification of different types of loan rationing, and, as a consequence, isolating household being at risk of having their access to credit limited. Zhao, Zhang and Barry (2014) propose identification, whether a household is in demand for third-party capital, as the first criterion. There can be a situation, where the household is contending with quantity rationing due to the fact that their application for a loan has been formally rejected by a financial institution (QR1), or their expectations were not satisfied with the external financing granted (QR2).…”

Section: Financial Constraints and Credit Interventionism In Agriculturementioning

confidence: 99%

Rationales and Possibilities of Wider Dissemination of Financial Instruments in the Cap and Cohesion Policy

Kulawik¹,

Soliwoda²,

Wieliczko³

2017

Zagadnienia Ekonomiki Rolnej

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There are new challenges ahead for the eu: the refugee crisis, climate change, high youth unemployment, external security issues, cyber threats and terrorism. Therefore, financial resources will be needed. The eU budget after 2020 may be even more modest than the current one. as a consequence, competition for funding, particularly in the form of subsidies, will also be tightened, also under the caP and cohesion policy. Financial instruments, namely repayable tools, should be more emphasized. The main aim of the article is to assess the potential use of financial instruments as tools that may partially replace the caP and cohesion policy in the near future. Theoretical rationales (i.e. credit constraints, credit interventions) will be presented. an in-depth discussion will be undertaken (using elements of economics of public sector, public finance and political economy) on the perspectives of dissemination of these instruments. our paper is a review study, with some elements of meta-analysis. The analysis shows that the aforesaid instruments can mainly be used for actions within rural, local and regional development programmes in which incomes may be generated, i.e. in investment, modernization and restructuring projects.

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“…The average number of bank outlets in a county was 56.41, and the average number of bank outlets in a township was 3.95 [ 18 ]. The primary formal financial institutions providing loans in rural areas are the Agricultural Development Bank of China, the Postal Savings Bank of China, the Rural Credit Cooperatives, and the Agricultural Bank of China [ 19 ].…”

Section: Introductionmentioning

confidence: 99%

Impact of Credit Constraints from Formal Financial Institutions on Rural Residents’ Health in China

2020

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This is the first study in China that looks at the impact of credit constraints from formal financial institutions on Chinese rural residents’ health. We use the Chinese Household Income Project (CHIP) data collected by the Annual Household Survey Office of Integration of Urban and Rural in the National Bureau of Statistics in 2014. We measure rural residents’ health status with self-rated health assessment and the number of sick days in 2013. The results obtained from using the ordered probit model show that, in general, credit constraints from formal financial institutions significantly and negatively affect the self-rated health of Chinese rural residents. When an endogeneity issue is addressed using the instrumental variable (IV) approach, this paper’s results are still robust. The results also show that the impact of credit constraints from formal financial institutions on rural residents’ self-rated health is significant in male, female, married, and unmarried sub-groups. Further, we find that credit constraints from formal financial institutions impact rural residents’ health through income and economic vulnerability. The findings have implications for preventing rural residents from falling into a health trap due to credit constraints from formal financial institutions.

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Do formal credit constraints affect the rural household consumption in China?

Cited by 4 publications

References 22 publications

Credit constraints and rural farmers’ welfare in an agrarian economy

Credit constraints and rural farmers’ welfare in an agrarian economy

Rationales and Possibilities of Wider Dissemination of Financial Instruments in the Cap and Cohesion Policy

Impact of Credit Constraints from Formal Financial Institutions on Rural Residents’ Health in China

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