Household Mobility Between Formal and Informal Credit Channels and Its Relationship to Economic and Social Status: An Empirical Analysis Based on Micro Data in China

This study conducts an investigation of the complex interactions between sustainable development and household mobility through both formal and informal finance channels in China. Utilizing panel data from the CHFS 2015 and 2017, the research specifically investigates the shifting patterns of borrowing among Chinese households. The study used a multinomial logit model to examine the factors influencing this mobility, highlighting the significant contributions of changes in both economic and social aspects and proposing that households may alternate between formal and informal channels depending on evolving circumstances and social networks. The results indicate that affluent households with higher asset, income, and extensive social networks demonstrate a propensity to engage with formal lending channels, whereas those with close kinship ties exhibit a preference for informal means of borrowing. This research is in perfect accordance with the knowledge economy paradigm as it examines the economic and social factors that influence credit mechanisms. Our results highlight the necessity of integrating both formal and informal finance sectors in policymaking, recognizing the dynamic interplay of household choices influenced by economic and social factors, to effectively shape financial inclusion strategies. It also acts as a knowledge reservoir for policymakers, economists, and stakeholders who are navigating the distinct characteristics of the Chinese knowledge economy.