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

Author Info

  • 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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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
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. Joseph P. Kaboski & Robert M. Townsend, 2011. "A Structural Evaluation of a Large‐Scale Quasi‐Experimental Microfinance Initiative," Econometrica, Econometric Society, vol. 79(5), pages 1357-1406, 09.
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  7. Huang, Jikun & Wang, Xiaobing & Zhi, Huayong & Huang, Zhurong & Rozelle, Scott, 2011. "Subsidies and distortions in China’s agriculture: evidence from producer-level data," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(1), March.
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  11. 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.
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  15. Jian Zhang & Linxiu Zhang & Scott Rozelle & Steve Boucher, 2006. "Self-Employment With Chinese Characteristics: The Forgotten Engine Of Rural China'S Growth," Contemporary Economic Policy, Western Economic Association International, vol. 24(3), pages 446-458, 07.
  16. 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.
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Cited by:

  1. 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.
  2. 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.

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