The Influence Mechanism of Farmers' Financial Literacy on Participation of Rural Real Estate MortgageA Case Study of Yongfeng, China Pilot

The mortgage right of rural real estate (RRE) is one of the legal and important property rights of the peasants, which is prohibited to be mortgaged because of rural housing land institute in China. In reality the financial demand of the peasants is huge in rural area, which need more invest into personal consumption, agriculture upgrading. So the central government starts the pilot reform of mortgage load of rural real estate, which is beneficial to activate the land asset, increase the financing channel, promoting the strategy of rural revitalization. It is found in previous literature that the level of financial literacy of farmers significantly affects the borrowing behavior. However, it is still unclear whether the financial literacy will also significantly affect the mortgage behavior of RRE and what the influencing mechanism is. The paper applies Logit regression model and regulatory effect model to reveal the influence mechanism of farmers' financial literacy on the mortgage loan of RRE based on data from Yongfeng pilot, and finds that: (1) The financial literacy of farmers has a significant positive impact on the participation behavior of RRE mortgage. The higher of the financial literacy of farmers, the more comprehensive the understanding of RRE mortgage, the more likely they are to participate in RRE mortgage; (2) Among the constituent factors of financial literacy, financial attention has the greatest impact on the mortgage, followed by risk identification ability, but the negative effect of financial ability is not significant. (3) The degree of homestead dependence of farmers plays a moderating role. The lower the homestead dependence of farmers, the more positive influence of financial literacy on the participation behavior of mortgage. Because farmers with low homestead dependence have less ""worries"" for mortgage, are more willing to apply for RRE mortgage. (4) Heterogeneity analysis show that the financial literacy has significantly influence on peasants owning urban house, but not for peasants without urban house