Farmers’ Choice and Informal Credit Markets in China
AbstractInformal credit markets are very active in many developing countries including China. Informal financial associations have become a major channel of borrowing. Using data from the 2006 Rural Household Survey, this paper investigates farmers’ borrowings from both formal and informal sources with higher/lower interest, by looking into both demand and supply of loan. Consistent with the theory and previous studies, age follows an inverted U-shaped pattern in its relationship with the probability of borrowing from informal loan with higher interest. Our study shows that the impact of age disappears for the formal loan participation. In addition, high income and saving imply lower credit constraints. Moreover, household and county characteristics and financial conditions have a large and varying influence on farmers’ borrowing behavior.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania with number 103887.
Date of creation: 2011
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informal credit; financial constraints; China; Agricultural Finance; Community/Rural/Urban Development; International Development; Q12; C5; G21;
Find related papers by JEL classification:
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- C5 - Mathematical and Quantitative Methods - - Econometric Modeling
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-24 (All new papers)
- NEP-MFD-2011-05-24 (Microfinance)
- NEP-TRA-2011-05-24 (Transition Economics)
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