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An Analysis of the Factors Influencing Choice of Microcredit Sources and Impact of Participation on Household Income

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  • Zhao Ding
  • Awudu Abdulai

Abstract

It is widely accepted that rural microcredit has the potential to contribute to poverty reduction in developing countries. This paper examines the factors that affect rural residents' decisions to participate in different types of microcredit sources and how these factors influence household income and consumption, using cross‐sectional data from a recent survey in China. We use a multinomial endogenous switching regression model to account for selection bias and treatment effects. The empirical findings indicate that family size, dependency ratio, local casual wage rate, credit information and shocks mainly determine the selection of different credit sources. Furthermore, the estimates reveal that participation of households in microcredit programmes contributes to an increase in both per capita income and consumption significantly. © 2020 John Wiley & Sons, Ltd.

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  • Zhao Ding & Awudu Abdulai, 2020. "An Analysis of the Factors Influencing Choice of Microcredit Sources and Impact of Participation on Household Income," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(4), pages 505-525, May.
    • Handle: RePEc:wly:jintdv:v:32:y:2020:i:4:p:505-525
    DOI: 10.1002/jid.3466
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    2. Cherry Wyle G. Layaoen & Kazushi Takahashi, 2022. "Can microfinance lending crowd out informal lenders? Evidence from the Philippines," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(2), pages 379-414, March.
    3. Krumbiegel, Katharina & Tillie, Pascal, 2024. "Sustainable practices in cocoa production. The role of certification schemes and farmer cooperatives," Ecological Economics, Elsevier, vol. 222(C).
    4. Kwabena Nyarko Addai & John N. Ng’ombe & Wencong Lu, 2023. "Disaggregated impacts of off-farm work participation on household vulnerability to food poverty in Ghana," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(1), pages 83-104, March.

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