IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v63y2020ics1043951x20301206.html
   My bibliography  Save this article

Access to credit and farmland rental market participation: Evidence from rural China

Author

Listed:
  • Li, Changsheng
  • Ma, Wanglin
  • Mishra, Ashok K.
  • Gao, Liangliang

Abstract

In this study, we analyze the impact of access to credit on farmland rental market participation of rural households. The study uses a nationally representative survey data of China Family Panel Studies and an endogenous switching probit model that accounts for selection bias for both observed and unobserved factors. Findings reveal that access to credit stimulates farmers' decisions to participate in farmland rental markets by increasing the likelihood of renting in and renting out farmland by about 10% and 20%, respectively. Results also reveal that the impact of access to credit on farmland rental market participation is heterogeneous when it comes to the age of the operator and and geographic locations of farmers. We show that younger credit users have a higher probability of renting in farmland, while their older counterparts have a higher probability of renting out farmland. Besides, credit users residing in central China have a higher probability of renting in farmland, while those living in eastern China have a higher likelihood of renting out farmland. Our findings highlight the importance of improving farmers' access to credit in facilitating the development of rural farmland rental markets.

Suggested Citation

  • Li, Changsheng & Ma, Wanglin & Mishra, Ashok K. & Gao, Liangliang, 2020. "Access to credit and farmland rental market participation: Evidence from rural China," China Economic Review, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:chieco:v:63:y:2020:i:c:s1043951x20301206
    DOI: 10.1016/j.chieco.2020.101523
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X20301206
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2020.101523?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Shoji, Masahiro & Aoyagi, Keitaro & Kasahara, Ryuji & Sawada, Yasuyuki & Ueyama, Mika, 2012. "Social Capital Formation and Credit Access: Evidence from Sri Lanka," World Development, Elsevier, vol. 40(12), pages 2522-2536.
    2. Fletschner, Diana, 2009. "Rural Women's Access to Credit: Market Imperfections and Intrahousehold Dynamics," World Development, Elsevier, vol. 37(3), pages 618-631, March.
    3. Zhang, Lan & Feng, Shuyi & Heerink, Nico & Qu, Futian & Kuyvenhoven, Arie, 2018. "How do land rental markets affect household income? Evidence from rural Jiangsu, P.R. China," Land Use Policy, Elsevier, vol. 74(C), pages 151-165.
    4. Klaus Deininger & Daniel Ayalew Ali & Tekie Alemu, 2013. "Productivity effects of land rental market operation in Ethiopia: evidence from a matched tenant--landlord sample," Applied Economics, Taylor & Francis Journals, vol. 45(25), pages 3531-3551, September.
    5. Jordan Chamberlin & Jacob Ricker-Gilbert, 2016. "Participation in Rural Land Rental Markets in Sub-Saharan Africa: Who Benefits and by How Much? Evidence from Malawi and Zambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1507-1528.
    6. Vall Castello, Judit, 2012. "Promoting employment of disabled women in Spain; Evaluating a policy," Labour Economics, Elsevier, vol. 19(1), pages 82-91.
    7. Yuan, Xuefeng & Du, Wenpeng & Wei, Xindong & Ying, Yue & Shao, Yajing & Hou, Rui, 2018. "Quantitative analysis of research on China’s land transfer system," Land Use Policy, Elsevier, vol. 74(C), pages 301-308.
    8. Wydick, Bruce & Karp Hayes, Harmony & Hilliker Kempf, Sarah, 2011. "Social Networks, Neighborhood Effects, and Credit Access: Evidence from Rural Guatemala," World Development, Elsevier, vol. 39(6), pages 974-982, June.
    9. Zibei Chen & Minchao Jin, 2017. "Financial Inclusion in China: Use of Credit," Journal of Family and Economic Issues, Springer, vol. 38(4), pages 528-540, December.
    10. Liu, Yu & Yan, Binjian & Wang, Yue & Zhou, Yingheng, 2019. "Will land transfer always increase technical efficiency in China?—A land cost perspective," Land Use Policy, Elsevier, vol. 82(C), pages 414-421.
    11. Démurger, Sylvie & Wang, Xiaoqian, 2016. "Remittances and expenditure patterns of the left behinds in rural China," China Economic Review, Elsevier, vol. 37(C), pages 177-190.
    12. Nidhiya Menon & Yana van der Meulen Rodgers, 2011. "How Access to Credit Affects Self-employment: Differences by Gender during India's Rural Banking Reform," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 48-69.
    13. Edward Martey & Alexander N. Wiredu & Prince M. Etwire & John K.M. Kuwornu, 2019. "The impact of credit on the technical efficiency of maize-producing households in Northern Ghana," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 79(3), pages 304-322, May.
    14. Yi Che, 2016. "Off-farm employments and land rental behavior: evidence from rural China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 8(1), pages 37-54, February.
    15. Yuan, Yan & Xu, Lihe, 2015. "Are poor able to access the informal credit market? Evidence from rural households in China," China Economic Review, Elsevier, vol. 33(C), pages 232-246.
    16. Jacob Ricker-Gilbert & Jordan Chamberlin, 2018. "Transaction Costs, Land Rental Markets, and Their Impact on Youth Access to Agriculture in Tanzania," Land Economics, University of Wisconsin Press, vol. 94(4), pages 541-555.
    17. Julius A. Nukpezah & Charles Blankson, 2017. "Microfinance Intervention in Poverty Reduction: A Study of Women Farmer-Entrepreneurs in Rural Ghana," Journal of African Business, Taylor & Francis Journals, vol. 18(4), pages 457-475, October.
    18. Jianyun Hou & Xuexi Huo & Runsheng Yin, 2017. "Land Rental Market Participation and Its Impact on Fixed Investment and Household Welfare: Evidence from Chinese Apple Production Sites," Sustainability, MDPI, vol. 9(11), pages 1-15, October.
    19. Kumar, Anjani & Mishra, Ashok K. & Sonkar, Vinay K. & Saroj, Sunil, 2020. "Access to Credit and Economic Well-Being of Rural Households: Evidence from Eastern India," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 45(1), January.
    20. Muraoka, Rie & Jin, Songqing & Jayne, T.S., 2018. "Land access, land rental and food security: Evidence from Kenya," Land Use Policy, Elsevier, vol. 70(C), pages 611-622.
    21. Lu, Xin-hai & Jiang, Xu & Gong, Meng-qi, 2020. "How land transfer marketization influence on green total factor productivity from the approach of industrial structure? Evidence from China," Land Use Policy, Elsevier, vol. 95(C).
    22. Michael Lokshin & Zurab Sajaia, 2011. "Impact of interventions on discrete outcomes: Maximum likelihood estimation of the binary choice models with binary endogenous regressors," Stata Journal, StataCorp LP, vol. 11(3), pages 368-385, September.
    23. Ma, Wanglin & Renwick, Alan & Nie, Peng & Tang, Jianjun & Cai, Rong, 2018. "Off-farm work, smartphone use and household income: Evidence from rural China," China Economic Review, Elsevier, vol. 52(C), pages 80-94.
    24. Jikun Huang & Jiping Ding, 2016. "Institutional innovation and policy support to facilitate small-scale farming transformation in China," Agricultural Economics, International Association of Agricultural Economists, vol. 47(S1), pages 227-237, November.
    25. Abebe Ejigu Alemu & Jimi O. Adesina, 2017. "In Search of Rural Entrepreneurship: Non-farm Household Enterprises (NFEs) as Instruments of Rural Transformation in Ethiopia," African Development Review, African Development Bank, vol. 29(2), pages 259-271, June.
    26. Mukasa Adamon N. & Anthony M. Simpasa & Adeleke Oluwole Salami, 2017. "Working Paper 247 - Credit constraints and farm productivity: Micro-level evidence from smallholder farmers in Ethiopia," Working Paper Series 2356, African Development Bank.
    27. Ciaian, Pavel & Guri, Fatmir & Rajcaniova, Miroslava & Drabik, Dusan & Paloma, Sergio Gomez y, 2018. "Land fragmentation and production diversification: A case study from rural Albania," Land Use Policy, Elsevier, vol. 76(C), pages 589-599.
    28. Yu, Junqing & Zhou, Kaile & Yang, Shanlin, 2019. "Land use efficiency and influencing factors of urban agglomerations in China," Land Use Policy, Elsevier, vol. 88(C).
    29. Li, Rui & Li, Qinghai & Lv, Xiaofeng & Zhu, Xi, 2019. "The land rental of Chinese rural households and its welfare effects," China Economic Review, Elsevier, vol. 54(C), pages 204-217.
    30. Fengxia Dong & Jing Lu & Allen M. Featherstone, 2012. "Effects of credit constraints on household productivity in rural China," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(3), pages 402-415, November.
    31. Meishan Jiang & Jingrong Li & Krishna P. Paudel & Yunsheng Mi, 2019. "Factors affecting agricultural land transfer-out in China: a semiparametric instrumental variable model," Applied Economics Letters, Taylor & Francis Journals, vol. 26(20), pages 1729-1733, November.
    32. Wanglin Ma & Awudu Abdulai & Renan Goetz, 2018. "Agricultural Cooperatives and Investment in Organic Soil Amendments and Chemical Fertilizer in China," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(2), pages 502-520.
    33. Meishan Jiang & Krishna P. Paudel & Yunsheng Mi, 2018. "Factors affecting agricultural land transfer-in in China: a semiparametric analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 25(21), pages 1547-1551, December.
    34. Anni Heikkilä & Panu Kalmi & Olli-Pekka Ruuskanen, 2016. "Social Capital and Access to Credit: Evidence from Uganda," Journal of Development Studies, Taylor & Francis Journals, vol. 52(9), pages 1273-1288, September.
    35. Swaminathan, Hema & Salcedo Du Bois, Rodrigo & Findeis, Jill L., 2010. "Impact of Access to Credit on Labor Allocation Patterns in Malawi," World Development, Elsevier, vol. 38(4), pages 555-566, April.
    36. Jikun Huang & Liangliang Gao & Scott Rozelle, 2012. "The effect of off‐farm employment on the decisions of households to rent out and rent in cultivated land in China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 4(1), pages 5-17, January.
    37. Nagler, Paula & Naudé, Wim, 2017. "Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence," Food Policy, Elsevier, vol. 67(C), pages 175-191.
    38. Kumar, Sunil Mitra, 2013. "Does Access to Formal Agricultural Credit Depend on Caste?," World Development, Elsevier, vol. 43(C), pages 315-328.
    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. Ma, Wanglin & Zheng, Hongyun & Nnaji, Amaka, 2023. "Cooperative membership and adoption of green pest control practices: Insights from rice farmers," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(03), April.
    2. Shengyang Sun & Chao Zhang & Ruifa Hu & Jian Liu, 2023. "Do Pesticide Retailers’ Recommendations Aggravate Pesticide Overuse? Evidence from Rural China," Agriculture, MDPI, vol. 13(7), pages 1-16, June.
    3. Ziqin Xu & Hui Niu & Yuxuan Wei & Yiping Wu & Yang Yu, 2024. "Impact and Mechanisms of Digital Inclusive Finance in Relation to Farmland Transfer: Evidence from China," Sustainability, MDPI, vol. 16(1), pages 1-21, January.
    4. Li, Xingguang & Zhang, Jianjun, 2024. "Rural digital credit and residential energy consumption: Evidence from the agricultural production perspective," Energy, Elsevier, vol. 290(C).
    5. Sun, Shengyang & Zhang, Chao & Hu, Ruifa & Liu, Jian, 2023. "Do pesticide retailers’ recommendations aggravate pesticide overuse? Evidence from rural China," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(7), pages 1-1.
    6. Fang Wu & Xibao Guo & Xia Guo, 2023. "Cooperative membership and new technology adoption of family farms: Evidence from China," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(3), pages 719-739, September.
    7. Haibo Lei & Qin Su, 2023. "Does the Use of Digital Finance Affect Household Farmland Transfer-Out?," Sustainability, MDPI, vol. 15(16), pages 1-18, August.
    8. Zhang, Jian & Mishra, Ashok K. & Ma, Xianlei, 2023. "Mechanism of Chinese farmers’ land rental participation: The role of invisible markets and public intervention," Food Policy, Elsevier, vol. 117(C).
    9. Punlork Men & Lyda Hok & Panchit Seeniang & B. Jan Middendorf & Rapee Dokmaithes, 2024. "Identifying Credit Accessibility Mechanisms for Conservation Agriculture Farmers in Cambodia," Agriculture, MDPI, vol. 14(6), pages 1-26, June.
    10. Huma Neupane & Krishna P. Paudel & Qinying He, 2023. "Impact of cooperative membership on market performance of Nepali goat farmers," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(3), pages 805-830, September.
    11. Wanglin Ma & Huanguang Qiu & Dil Bahadur Rahut, 2023. "Rural development in the digital age: Does information and communication technology adoption contribute to credit access and income growth in rural China?," Review of Development Economics, Wiley Blackwell, vol. 27(3), pages 1421-1444, August.
    12. Xiang Li & Hyukku Lee, 2022. "An Analysis on the Determining Factors of Farmers’ Land-Scale Management: Empirical Analysis Based on the Micro-Perspective of Farmers in China," Land, MDPI, vol. 11(8), pages 1-15, August.
    13. Feilong Weng & Xuan Liu & Xuexi Huo, 2023. "Impact of Internet Use on Farmers’ Organic Fertilizer Investment: A New Perspective of Access to Credit," Agriculture, MDPI, vol. 13(1), pages 1-13, January.
    14. Li, Junpeng & Ma, Wanglin & Gong, Binlei, 2023. "Market participation and subjective well-being of maize farmers," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 941-960.
    15. Chen, Conghui & Liu, Bing & Wang, Ziyou, 2023. "Can land transfer relax credit constraints? Evidence from China," Economic Modelling, Elsevier, vol. 122(C).

    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. Chen, Conghui & Liu, Bing & Wang, Ziyou, 2023. "Can land transfer relax credit constraints? Evidence from China," Economic Modelling, Elsevier, vol. 122(C).
    2. Ma, Wanglin & Qiu, Huanguang & Fan, Yubing & Zhou, Xiaoshi, 2020. "The joint effects of ICT adoption and access to credit on household income in China," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304431, Agricultural and Applied Economics Association.
    3. Zhang, Jian & Mishra, Ashok K. & Ma, Xianlei, 2023. "Mechanism of Chinese farmers’ land rental participation: The role of invisible markets and public intervention," Food Policy, Elsevier, vol. 117(C).
    4. Zou, Baoling & Mishra, Ashok K., 2022. "Engaging Information Technology in Farmland Rental Market: An Empirical Study from Rural China," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322265, Agricultural and Applied Economics Association.
    5. Zhang, Jian & Mishra, Ashok K. & Hirsch, Stefan, 2021. "Market-oriented agriculture and farm performance: Evidence from rural China," Food Policy, Elsevier, vol. 100(C).
    6. Zhang, Yuanxia & Halder, Pradipta & Zhang, Xiaoning & Qu, Mei, 2020. "Analyzing the deviation between farmers' Land transfer intention and behavior in China's impoverished mountainous Area: A Logistic-ISM model approach," Land Use Policy, Elsevier, vol. 94(C).
    7. Wenjing Han & Zhengfeng Zhang & Xiaoling Zhang & Li He, 2021. "Farmland Rental Participation, Agricultural Productivity, and Household Income: Evidence from Rural China," Land, MDPI, vol. 10(9), pages 1-22, August.
    8. Jian Zhang & Ashok K. Mishra & Peixin Zhu, 2021. "Land rental markets and labor productivity: Evidence from rural China," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(1), pages 93-115, March.
    9. Deng, Xin & Xu, Dingde & Zeng, Miao & Qi, Yanbin, 2019. "Does Internet use help reduce rural cropland abandonment? Evidence from China," Land Use Policy, Elsevier, vol. 89(C).
    10. Min, Shi & Liu, Min & Huang, Jikun, 2020. "Does the application of ICTs facilitate rural economic transformation in China? Empirical evidence from the use of smartphones among farmers," Journal of Asian Economics, Elsevier, vol. 70(C).
    11. Weiguo Fan & Wei Yao & Kehan Chen, 2023. "Integrating Energy Systems Language and Emergy Approach to Simulate and Analyze the Energy Flow Process of Land Transfer," Land, MDPI, vol. 12(5), pages 1-24, May.
    12. Le Phuong Xuan Dang & Viet-Ngu Hoang & Son Hong Nghiem & Clevo Wilson, 2023. "Social capital and informal credit access: empirical evidence from a Vietnamese household panel survey," Empirical Economics, Springer, vol. 65(1), pages 311-340, July.
    13. Kijima, Yoko & Tabetando, Rayner, 2020. "Efficiency and equity of rural land markets and the impact on income: Evidence in Kenya and Uganda from 2003 to 2015," Land Use Policy, Elsevier, vol. 91(C).
    14. Mishra, Aswini Kumar & Bhardwaj, Vedant, 2022. "Financial access and household’s borrowing: Policy perspectives of an emerging economy," Journal of Policy Modeling, Elsevier, vol. 44(5), pages 981-999.
    15. Xiaolin Guo & Guanming Shi & Linyi Zheng & Wenrong Qian, 2022. "How Does the Land Rental Market Participation Affect Household Efficiency? Evidence from Rural China," IJERPH, MDPI, vol. 19(23), pages 1-14, December.
    16. Lin Tang & Xiaofeng Luo & Yanzhong Huang & Sanxia Du & Aqian Yan, 2023. "Can smartphone use increase farmers’ willingness to participate in the centralized treatment of rural domestic sewage? Evidence from rural China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(4), pages 3379-3403, April.
    17. Ying Liu & Chenggang Wang & Zeng Tang & Zhibiao Nan, 2019. "Does Farmland Rental Contribute to Reduction of Agrochemical Use? A Case of Grain Production in Gansu Province, China," Sustainability, MDPI, vol. 11(8), pages 1-15, April.
    18. Martinson Ankrah Twumasi & Abbas Ali Chandio & Ghulam Raza Sargani & Isaac Asare & Huaquan Zhang, 2022. "Off-Farm Employment and Agricultural Credit Fungibility Nexus in Rural Ghana," Sustainability, MDPI, vol. 14(15), pages 1-15, July.
    19. Ma, Wanglin & Renwick, Alan & Nie, Peng & Tang, Jianjun & Cai, Rong, 2018. "Off-farm work, smartphone use and household income: Evidence from rural China," China Economic Review, Elsevier, vol. 52(C), pages 80-94.
    20. Liqiong Lin & Weizhuo Wang & Christopher Gan & David A. Cohen & Quang T.T Nguyen, 2019. "Rural Credit Constraint and Informal Rural Credit Accessibility in China," Sustainability, MDPI, vol. 11(7), pages 1-20, April.

    More about this item

    Keywords

    Access to credit; Farmland rental market participation; Selection bias; Endogenous switching probit model; China;
    All these keywords.

    JEL classification:

    • 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
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

    Statistics

    Access and download statistics

    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:eee:chieco:v:63:y:2020:i:c:s1043951x20301206. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    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.