IDEAS home Printed from https://ideas.repec.org/a/zbw/espost/235619.html
   My bibliography  Save this article

Do credit constraints affect households' economic vulnerability? Empirical evidence from rural China

Author

Listed:
  • Peng, Yan-ling
  • Ren, Yanjun
  • Li, Hou-jian

Abstract

Poverty alleviation is still one of the major challenges in developing countries, especially in transitional economy like China. From the perspective of anti-poverty, this paper examines the impact of formal credit constraints (FCCs) and informal credit constraints (IFCCs) on economic vulnerability (EV) using the data from the China Household Income Project (CHIP) survey for 2013 (CHIPs 2013) of rural households. The potential endogeneity problem of credit constraints (CCs) is addressed by applying the control function approach within an ordered probit model. The results show that both FCCs and IFCCs have a robust positive and significant impact on the EV of rural households and that the impact of FCCs is greater than that of IFCCs. To identify the potential mechanisms through which CCs affect EV, the seemingly unrelated regressions are used and the potential intercorrelation among these mechanisms is examined. We find that the impact of CCs on EV is partly mediated by health, trust, per capita financial assets and per capita income, whereby health and per capita income contribute to most of the total indirect effect. Thus, policies focus on supply-side and demand-side to improve credit accessibility could reduce rural households' EV, especially through its positive effect on health and per capita income.

Suggested Citation

  • Peng, Yan-ling & Ren, Yanjun & Li, Hou-jian, 2021. "Do credit constraints affect households' economic vulnerability? Empirical evidence from rural China," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 20(9), pages 2552-2568.
    • Handle: RePEc:zbw:espost:235619
    DOI: 10.1016/S2095-3119(20)63557-2
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/235619/1/Peng_2021_credit_constraints.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.1016/S2095-3119(20)63557-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Stephen R. Boucher & Michael R. Carter & Catherine Guirkinger, 2008. "Risk Rationing and Wealth Effects in Credit Markets: Theory and Implications for Agricultural Development," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 409-423.
    2. Md. Shafiul Azam & Katsushi Imai, 2009. "Vulnerability and Poverty in Bangladesh," Economics Discussion Paper Series 0905, Economics, The University of Manchester.
    3. Katsushi Imai & Xiaobing Wang & Woojin Kang, 2010. "Poverty and vulnerability in rural China: effects of taxation," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 8(4), pages 399-425.
    4. Daniel Ayalew Ali & Klaus Deininger & Marguerite Duponchel, 2014. "Credit Constraints and Agricultural Productivity: Evidence from rural Rwanda," Journal of Development Studies, Taylor & Francis Journals, vol. 50(5), pages 649-665, May.
    5. Ali, Daniel Ayalew & Deininger, Klaus & Duponchel, Marguerite, 2014. "Credit constraints, agricultural productivity, and rural nonfarm participation : evidence from Rwanda," Policy Research Working Paper Series 6769, The World Bank.
    6. Bhuiyan, Muhammad Faress & Ivlevs, Artjoms, 2019. "Micro-entrepreneurship and subjective well-being: Evidence from rural Bangladesh," Journal of Business Venturing, Elsevier, vol. 34(4), pages 625-645.
    7. Boucher, Stephen R. & Carter, Michael R. & Guirkinger, Catherine, 2008. "AJAE Appendix: Risk Rationing and Wealth Effects in Credit Markets: Theory and Implications for Agriculture Development," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 90(2), pages 1-6.
    8. Lino Briguglio & Gordon Cordina & Nadia Farrugia & Stephanie Vella, 2009. "Economic Vulnerability and Resilience: Concepts and Measurements," Oxford Development Studies, Taylor & Francis Journals, vol. 37(3), pages 229-247.
    9. Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yanling Peng & Yuansheng Jiang & Yu Hong, 2022. "Heterogeneous Preferences for Selecting Attributes of Farmland Management Right Mortgages in Western China: A Demand Perspective," Land, MDPI, vol. 11(8), pages 1-14, July.
    2. Lv, Xueliang & Yu, Yue & Zhao, Xiaomeng & Si, Deng-Kui, 2023. "Minimum wage and household economic vulnerability: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 624-646.
    3. Jiang, Meishan & Li, Jingrong & Mi, Yunsheng, 2024. "Farmers’ cooperatives and smallholder farmers’ access to credit: Evidence from China," Journal of Asian Economics, Elsevier, vol. 92(C).
    4. Qianqian Zhang & Tao Li & Jianzhong Yan & Liuna Xie & Xiongwei Tan, 2024. "Targeted Poverty Alleviation for the Livelihood Improvement of Poverty-Stricken Households: A Case Study of Wuxi County, China," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(6), pages 1519-1544, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Balana, Bedru B. & Mekonnen, Dawit & Haile, Beliyou & Hagos, Fitsum & Yimam, Seid & Ringler, Claudia, 2022. "Demand and supply constraints of credit in smallholder farming: Evidence from Ethiopia and Tanzania," World Development, Elsevier, vol. 159(C).
    2. Seck, Abdoulaye, 2018. "Heterogeneous Credit Constraints and Smallholder Farming in Senegal," 92nd Annual Conference, April 16-18, 2018, Warwick University, Coventry, UK 273491, Agricultural Economics Society.
    3. Balana, Bedru & Oyeyemi, Motunrayo, 2021. "Credit Constraints and Adoption of Agricultural Technologies in Developing Countries? Evidence from Nigeria," 2021 Conference, August 17-31, 2021, Virtual 315347, International Association of Agricultural Economists.
    4. Wainaina, P. & Njagi, T. & Onyango, K., 2018. "Credit constraints, off-farm participation and productivity; case of Kenyan rural sector," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277050, International Association of Agricultural Economists.
    5. Anette Ruml & Martin C. Parlasca, 2022. "In‐kind credit provision through contract farming and formal credit markets," Agribusiness, John Wiley & Sons, Ltd., vol. 38(2), pages 402-425, April.
    6. Allison Benson & Jean-Paul Faguet & Maria del pilar López Uribe, 2020. "Increasing Access to Agricultural Credit: The Heterogeneous Effects of Collective Action," Documentos CEDE 18347, Universidad de los Andes, Facultad de Economía, CEDE.
    7. Allison Benson & Jean-Paul Faguet, 2023. "Increasing Access to Formal Agricultural Credit: The Role of Rural Producer Organisations," Journal of Development Studies, Taylor & Francis Journals, vol. 59(1), pages 21-38, January.
    8. A D Adom, 2016. "Resilience of developing countries to shocks: Case study of WAEMU countries with SUR and VAR Approaches," Economic Issues Journal Articles, Economic Issues, vol. 21(2), pages 105-138, September.
    9. Quentin Stoeffler & Michael Carter & Catherine Guirkinger & Wouter Gelade, 2022. "The Spillover Impact of Index Insurance on Agricultural Investment by Cotton Farmers in Burkina Faso," The World Bank Economic Review, World Bank, vol. 36(1), pages 114-140.
    10. Celidoni, Martina, 2011. "Vulnerability to poverty: An empirical comparison of alternative measures," MPRA Paper 33002, University Library of Munich, Germany.
    11. Alain de Janvry & Élisabeth Sadoulet, 2023. "Seven propositions to support and finance the agricultural sector in sub-Saharan Africa in the context of climate change WP324," Working Papers hal-04123941, HAL.
    12. Tauisi Taupo & Ilan Noy, 2017. "At the Very Edge of a Storm: The Impact of a Distant Cyclone on Atoll Islands," Economics of Disasters and Climate Change, Springer, vol. 1(2), pages 143-166, July.
    13. Olomola, Aderibigbe, 2014. "Business operations of agrodealers and their participation in the loan market in Nigeria," IFPRI discussion papers 1400, International Food Policy Research Institute (IFPRI).
    14. Stoeffler, Quentin & Wouter, Gelade & Catherine, Guirkinger & Michael, Carter, 2016. "Indirect protection: the impact of cotton insurance on farmers’ income portfolio in Burkina Faso," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235980, Agricultural and Applied Economics Association.
    15. Zhe Liu & Zhenhong Qi & Qingsong Tian & John Stephen Clark & Zeyu Zhang, 2024. "The Impact of Digital Finance on Farmers’ Adoption of Eco-Agricultural Technology: Evidence from Rice-Crayfish Co-Cultivation Technology in China," Agriculture, MDPI, vol. 14(4), pages 1-20, April.
    16. Montalbano, Pierluigi, 2011. "Trade Openness and Developing Countries' Vulnerability: Concepts, Misconceptions, and Directions for Research," World Development, Elsevier, vol. 39(9), pages 1489-1502, September.
    17. Jiguang Zhu & Yaru Sun & Yunxing Song, 2022. "Household Livelihood Strategy Changes and Agricultural Diversification: A Correlation and Mechanism Analysis Based on Data from the China Family Panel," Land, MDPI, vol. 11(5), pages 1-18, May.
    18. Petraud, Jean & Boucher, Stephen & Carter, Michael, 2015. "Competing theories of risk preferences and the demand for crop insurance: Experimental evidence from Peru," 2015 Conference, August 9-14, 2015, Milan, Italy 211383, International Association of Agricultural Economists.
    19. -, 2011. "Study on the vulnerability and resilience of Caribbean Small Island Developing States (SIDS)," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38568, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    20. Nusrat Abedin Jimi & Plamen V. Nikolov & Mohammad Abdul Malek & Subal Kumbhakar, 2019. "The effects of access to credit on productivity: separating technological changes from changes in technical efficiency," Journal of Productivity Analysis, Springer, vol. 52(1), pages 37-55, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:espost:235619. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zbwkide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.