The Impact of Public Health Insurance on Household Credit Availability in Rural China: Evidence from NRCMS

Abstract

A large body of literature has shown that the burden of healthcare can push individuals and households into the burden of medical care and income loss. This makes it difficult for rural or low-income households to obtain and use safe and affordable formal credit services. In 2003, China’s government implemented a new rural public health insurance, which was called the New Rural Cooperative Medical Scheme (NRCMS). This study provides evidence of the impact of NRCMS on household credit availability using the China Family Panel Studies (CFPS) for 2010. The tobit regression approach and mediator model are used. The results show that, as a public health insurance system sustained by the participation of government investment, the NRCMS provides good “collateral” and significantly enhances rural households’ formal credit availability level. Furthermore, this positive effect is mainly reflected in the economic effect of NRCMS. Our results are robust to alternative statistical methods. Our findings suggest that expanding access, fulfilling the NRCMS mortgage function, and providing more financial services for rural households would have big benefits with regard to easing credit constraints for rural residents.

Digital Literacy Level and Formal Credit Constraints: Probit Analysis of Farm Households’ Borrowing Behavior in China

“…Due to the constraints imposed by the CFPS questionnaire, the present study employs an indirect methodology to identify the formal borrowing behavior of farmers. Referring to related studies [54][55][56][57][58][59][60], the CFPS2020 questionnaire asks "Whether you took out a loan to buy or renovate a home for purchasing or constructing a home, do you have any outstanding bank loans" and "In addition to the loan for purchasing or constructing or renovating a home, does your household have any other outstanding bank loans" as the measurement indicators. The presence of an outstanding bank loan can be regarded as an indirect indication of the farmer's use of formal borrowing channels.…”

Development of Tools for Synergy of Social Functions of the State and Housing Mortgage Loans in Russia: Regional Analysis of the Central, Southern and Volga Federal Districts

“…The high role and necessity of the state's participation in the implementation of the social function are confirmed by the experience of China, which implemented rural public health insurance, which was called the New Rural Cooperative Medical Scheme (NRCMS), contributed to the development of the HLM market (Yang et al 2020).…”