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Does the commercialization reform of rural credit cooperatives promote the growth of family farms?

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  • Chen, Zhongwen
  • Ding, Zeyu
  • Lin, Cheng-To

Abstract

This paper, based on the data of Chinese family farms from 2013 to 2021, uses the transformation of rural credit cooperatives (RCCs) into rural commercial banks (RCBs) as a quasi-natural experiment and employs a multi-period gradual Difference-in-Differences (DID) model to empirically test the impact of the commercialization reform of RCCs on the growth of family farms and its mechanisms. The study finds that: (1) the commercialization reform of RCCs significantly promotes the growth of family farms; (2) in terms of mechanisms, the commercialization reform of RCCs can promote the growth of family farms through two mechanisms: alleviating financing constraints and reducing leverage levels; (3) further heterogeneity analysis on individual characteristics of family farms and their regions shows that the promotional effect of the commercialization reform of RCCs on the growth of larger-scale, better-managed family farms, as well as those located in the eastern and western regions, areas with lower levels of digital financial development, and higher levels of innovation and entrepreneurship, is more pronounced. This paper provides theoretical support for the continued advancement of the commercialization reform of RCCs and also offers some policy references for the future reform direction of local rural financial institutions.

Suggested Citation

  • Chen, Zhongwen & Ding, Zeyu & Lin, Cheng-To, 2025. "Does the commercialization reform of rural credit cooperatives promote the growth of family farms?," International Review of Economics & Finance, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:reveco:v:102:y:2025:i:c:s1059056025004344
    DOI: 10.1016/j.iref.2025.104271
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    References listed on IDEAS

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    1. Gershon Feder & Lawrence J. Lau & Justin Y. Lin & Xiaopeng Luo, 1990. "The Relationship between Credit and Productivity in Chinese Agriculture: A Microeconomic Model of Disequilibrium," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(5), pages 1151-1157.
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