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The Dual Threshold Limit of Financing and Formal Credit Availability with Chinese Rural Households: An Investigation Based on a Large Scale Survey

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Listed:
  • Long Qin

    (School of Economics and Management, Beihang University, Beijing 100191, China)

  • Ruoen Ren

    (School of Economics and Management, Beihang University, Beijing 100191, China)

  • Qinghai Li

    (School of Economics, Nanjing University of Finance and Economics, Nanjing 210046, China)

Abstract

The literature on credit availability for rural households primarily focuses on the supply side, and largely ignores the demand side. This paper divided the credit process into three stages using large-scale household survey data. It also reviewed the credit process in other developing countries. A dual sample selection model was used to deal with the dual self-selection problem, which has been neglected in previous studies. This paper found that the main obstacle that farmers faced in obtaining financing was fear of applying for credit from formal financial institutions. In addition, there were significant differences in the determinants of different stages of the credit process of rural households.

Suggested Citation

  • Long Qin & Ruoen Ren & Qinghai Li, 2018. "The Dual Threshold Limit of Financing and Formal Credit Availability with Chinese Rural Households: An Investigation Based on a Large Scale Survey," Sustainability, MDPI, vol. 10(10), pages 1-18, October.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:10:p:3577-:d:174140
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    References listed on IDEAS

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    1. Kumar, Anjani & Mishra, Ashok K. & Saroj, Sunil & Joshi, P.K., 2017. "Institutional versus non-institutional credit to agricultural households in India: Evidence on impact from a national farmers’ survey," Economic Systems, Elsevier, vol. 41(3), pages 420-432.
    2. Vadean, Florin & Piracha, Matloob, 2009. "Circular Migration or Permanent Return: What Determines Different Forms of Migration?," IZA Discussion Papers 4287, Institute of Labor Economics (IZA).
    3. Mikkel Barslund & Finn Tarp, 2006. "Rural Credit in Vietnam," Discussion Papers 06-03, University of Copenhagen. Department of Economics.
    4. Li, Changsheng & Lin, Liqiong & Gan, Christopher E.C., 2016. "China credit constraints and rural households’ consumption expenditure," Finance Research Letters, Elsevier, vol. 19(C), pages 158-164.
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    Cited by:

    1. Jiaojiao Liu & Gangren Zhang & Jun Zhang & Chongguang Li, 2020. "Human Capital, Social Capital, and Farmers’ Credit Availability in China: Based on the Analysis of the Ordered Probit and PSM Models," Sustainability, MDPI, vol. 12(4), pages 1-18, February.

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