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The Impact of Credit Constraints on the Performance of Chinese Agricultural Wholesalers

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  • Hu, Lifang
  • Lopez, Rigoberto A.
  • Zeng, Yinchu

Abstract

Following market reforms and economic growth since the late 1970s, agricultural wholesale markets in China have developed substantially and become increasingly important in food distribution. This paper investigates the impact of credit constraints on the performance of agricultural wholesalers via a stochastic frontier approach (SFA) and a sample of 1,332 wholesalers nationwide. Empirical results show that relaxing credit constraints imposed by formal institutions results in an approximately 20-30 percent increase in the annual sales of agricultural wholesalers who are credit-constrained (40 percent of the sample). Credit constraints disproportionally impact the performance of micro and small wholesalers. Thus, policies aimed at providing credit access for these wholesalers would significantly boost the performance of smaller agricultural wholesalers while improving the functioning of these markets in China.

Suggested Citation

  • Hu, Lifang & Lopez, Rigoberto A. & Zeng, Yinchu, 2016. "The Impact of Credit Constraints on the Performance of Chinese Agricultural Wholesalers," Working Paper series 290125, University of Connecticut, Charles J. Zwick Center for Food and Resource Policy.
    • Handle: RePEc:ags:ucozwp:290125
    DOI: 10.22004/ag.econ.290125
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    Cited by:

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    2. Hu, Lifang & Lopez, Rigoberto A. & Zeng, Yinchu, 2020. "Determinants of credit constraints for agricultural wholesalers in China," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 23(4), June.

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    Keywords

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    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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