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Formal productive credit access and productive asset expansion: Evidence from rural China

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  • Nie, Song
  • Huang, Qin-Qin
  • Jiang, Zhi-Qiang

Abstract

Financial frictions can distort capital allocation and constrain productive investment and the expansion of productive assets by farm households. Using micro-level data from the China Labor-force Dynamics Survey (CLDS), this paper shows that formal productive credit access significantly expands the productive asset base under household control. The results indicate that this real investment response operates mainly through land reallocation via farmland transfers. The positive effect is most evident among small and medium-scale households and is stronger in eastern regions. These results provide micro-level evidence on the real effects of formal productive credit access and highlight how relaxing financing constraints facilitates productive investment and asset reallocation, with implications for the targeting and design of rural credit programs.

Suggested Citation

  • Nie, Song & Huang, Qin-Qin & Jiang, Zhi-Qiang, 2026. "Formal productive credit access and productive asset expansion: Evidence from rural China," Finance Research Letters, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:finlet:v:99:y:2026:i:c:s154461232600512x
    DOI: 10.1016/j.frl.2026.109983
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