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Positive effect of village debt on land transfer: Evidence from county-level panel data of village finance in Zhejiang Province

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  • Chunhui Ye
  • Suwen Zheng
  • Edward Gu

Abstract

The purpose of this paper is to examine the impact of village debt on land transfer. Based on the county-level panel data of village finance and land transfer in 90 counties and 4 economic development zones of Zhejiang Province from 2013 to 2017, this paper carried out multivariate statistical analysis and set a fixed effect model to control the endogenous influence of region and time. It found that village debt as a pressure may encourage village committees to promote rural land transfer, and then especially promote land flows into agricultural firms; as a mechanism, the burden of village organization’s transactional debt (historical debt and administrative debt) is the key to promoting the rural land flow to agricultural enterprises; through further analysis, it is found that the village committee seeks "win-win" opportunities by intervening in land circulation to ensure the rights and interests of farmers and to obtain village benefits from them. This paper finds that this kind of push effect has the threshold, the debt will play a significant role in promoting when the debt rate is between 4.65% and 7.9%. In addition, there is regional heterogeneity in the contribution of debt, which exists only in plain, non-coastal and high-dependence areas. The results of this paper verify the view that "community mechanism and market mechanism are embedded and supported each other in acquaintance society" in the theory of community governance. In practice, it provides a realistic basis for policy makers to implement the policy of encouraging farmland circulation and properly deal with the problem of village debt.

Suggested Citation

  • Chunhui Ye & Suwen Zheng & Edward Gu, 2021. "Positive effect of village debt on land transfer: Evidence from county-level panel data of village finance in Zhejiang Province," PLOS ONE, Public Library of Science, vol. 16(7), pages 1-26, July.
    • Handle: RePEc:plo:pone00:0255072
    DOI: 10.1371/journal.pone.0255072
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