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Financial literacy, farmland mortgage financing, and household entrepreneurship: Empirical evidence from rural China

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  • Su, Lanlan
  • Peng, Yanling
  • Kong, Rong

Abstract

Farmland mortgage financing policy has been actively carried out and intertwined with mass entrepreneurship strategy in China in recent years. Using survey data of 1947 rural households in pilot counties of farmland mortgage loans (FMLs), we contribute to the literature by examining the impact of financial literacy on rural households’ entrepreneurship with considering the heterogeneity between agricultural and non-agricultural entrepreneurship and exploring how financial literacy affects entrepreneurship through FMLs. The results show that financial literacy has a significant and positive impact on both rural households’ agricultural and non-agricultural entrepreneurship. Moreover, households with higher level of financial literacy show a higher probability in the application for and approval of more FMLs. This study provides strong evidence that the impact of financial literacy on farm households’ agricultural entrepreneurship is partially mediated by FMLs, while that impact on their non-agricultural entrepreneurship is partially suppressed by FMLs. We further find that financial literacy can also increase rural households’ entrepreneurial income through their approval of FMLs. These findings suggest that systematical financial literacy training programs are needed to popularize FML products and services and facilitate rural households’ entrepreneurship.

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  • Su, Lanlan & Peng, Yanling & Kong, Rong, 2024. "Financial literacy, farmland mortgage financing, and household entrepreneurship: Empirical evidence from rural China," Journal of Asian Economics, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:asieco:v:94:y:2024:i:c:s1049007824000629
    DOI: 10.1016/j.asieco.2024.101767
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    More about this item

    Keywords

    Entrepreneurship; Financial literacy; Farmland mortgage financing; Inclusive finance;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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