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The link between credit markets and self-employment choice among households in rural China

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  • Han, Linghui
  • Hare, Denise
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    Abstract

    Our paper examines how credit markets operate through wealth to influence households’ entrepreneurial choices. Our results show that policy-led bank branch withdrawal in rural China has a significant negative impact on credit availability to rural households, though unexpectedly the effect is felt more strongly in informal than formal credit markets. Furthermore, we observe that self-employment is impeded by reductions in wealth associated with credit contraction. Policies which provide more and better formal financial services to rural households are predicted to increase the flow of credit, through both formal and informal channels, thereby supporting accumulation, diversification, and economic growth.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Asian Economics.

    Volume (Year): 26 (2013)
    Issue (Month): C ()
    Pages: 52-64

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    Handle: RePEc:eee:asieco:v:26:y:2013:i:c:p:52-64

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    Web page: http://www.elsevier.com/locate/asieco

    Related research

    Keywords: Rural credit markets; Self-employment; Asia; China;

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    Cited by:
    1. Simoes, Nadia & Moreira, Sandrina B. & Crespo, Nuno, 2013. "Individual Determinants of Self-Employment Entry – What Do We Really Know?," MPRA Paper 48403, University Library of Munich, Germany.

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