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Credit Constraints on Farm Household Welfare in Rural China: Evidence from Fujian Province

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  • Liqiong Lin

    (College of Economics, Fujian Agriculture and Forestry University, Fuzhou 350002, China)

  • Weizhuo Wang

    (College of International Business, Dalian Minzu University, Dalian 116000, China)

  • Christopher Gan

    (Department of Business and Finance, Faculty of Agribusiness and Commerce, Lincoln University, Christchurch 7647, New Zealand)

  • Quang T. T. Nguyen

    (Faculty of Banking, University of Economics—The University of Danang, Danang 556938, Vietnam)

Abstract

This study investigates the effect of demographic factors on formal and informal borrowing households in rural Fujian Province. The study tests whether credit constraint affects rural farmers’ welfare in the studied region, using a probit regression and endogenous switching regression model to analyse data collected in 2017 from 960 farm households. Analysis shows that age, poverty, household size, and farmland size operate to constrain credit in formal borrowing. Results also indicate that level of education, farm land size and age have significant impacts on rural household borrowing from informal sources. The results from the endogenous switching model approach suggest that credit constraint does have a significant impact on rural farmers’ consumption and welfare in Fujian province.

Suggested Citation

  • Liqiong Lin & Weizhuo Wang & Christopher Gan & Quang T. T. Nguyen, 2019. "Credit Constraints on Farm Household Welfare in Rural China: Evidence from Fujian Province," Sustainability, MDPI, vol. 11(11), pages 1-19, June.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:11:p:3221-:d:238721
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