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Microfinance, self-employment, and entrepreneurs in less developed areas of rural China

Author Info

Listed author(s):
  • Jia, Xiangping
  • Xiang, Cheng
  • Huang, Jikun

Abstract

China is experiencing a transformation, as vast numbers of rural laborers move toward off-farm employment. In such a transformation, the role of credit is unclear. The overall goal of this study is to examine the impact of access to credit by rural households on employment decision-making by rural laborers in China. Based on longitudinal data concerning 1992 rural households in China, this study finds that the use of credit is immense in rural China. Among different types of credit, access to microfinance significantly increased farmers' time working on self-employment activities, especially for the poor households. Credit from formal financial institutions and informal networks had no such effect.

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File URL: http://www.sciencedirect.com/science/article/pii/S1043951X1300076X
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Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 27 (2013)
Issue (Month): C ()
Pages: 94-103

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Handle: RePEc:eee:chieco:v:27:y:2013:i:c:p:94-103
DOI: 10.1016/j.chieco.2013.09.001
Contact details of provider: Web page: http://www.elsevier.com/locate/chieco

Keywords: Off-farm; Self-employment; Credit; Labor; Poverty;

Find related papers by JEL classification:

  • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
  • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
  • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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  1. Dean Karlan & Jonathan Zinman, 2010. "Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts," Review of Financial Studies, Society for Financial Studies, vol. 23(1), pages 433-464, January.
  2. Huffman, Wallace E., 1991. "Agricultural Household Models: Survey and Critique," Staff General Research Papers Archive 11008, Iowa State University, Department of Economics.
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  11. John Knight & Li Shi, 1997. "Cumulative causation and inequality among villages in China," Oxford Development Studies, Taylor & Francis Journals, vol. 25(2), pages 149-172.
  12. Xiangping Jia, 2010. "Credit rationing of rural households in China," Agricultural Finance Review, Emerald Group Publishing, vol. 70(1), pages 37-54, May.
  13. Signe-Mary McKernan, 2002. "The Impact Of Microcredit Programs On Self-Employment Profits: Do Noncredit Program Aspects Matter?," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 93-115, February.
  14. Hongbin Li & Scott Rozelle & Linxiu Zhang, 2004. "Micro-credit programs and off-farm migration in China," Pacific Economic Review, Wiley Blackwell, vol. 9(3), pages 209-223, October.
  15. Nidhiya Menon & Yana van der Meulen Rodgers, 2011. "How Access to Credit Affects Self-employment: Differences by Gender during India's Rural Banking Reform," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 48-69.
  16. Yoko Kijima & Tomoya Matsumoto & Takashi Yamano, 2006. "Nonfarm employment, agricultural shocks, and poverty dynamics: evidence from rural Uganda," Agricultural Economics, International Association of Agricultural Economists, vol. 35(s3), pages 459-467, November.
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  18. Wang, Xiaobing & Huang, Jikun & Zhang, Linxiu & Rozelle, Scott, 2011. "The rise of migration and the fall of self employment in rural China's labor market," China Economic Review, Elsevier, vol. 22(4), pages 573-584.
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Cited by:

  1. Yuan, Yan & Xu, Lihe, 2015. "Are poor able to access the informal credit market? Evidence from rural households in China," China Economic Review, Elsevier, vol. 33(C), pages 232-246.
  2. Liu, Ying & Huang, Jikun & Zikhali, Precious, 2016. "The bittersweet fruits of industrialization in rural China: The cost of environment and the benefit from off-farm employment," China Economic Review, Elsevier, vol. 38(C), pages 1-10.

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