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Farmers’ Choice and Informal Credit Markets in China

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  • Yuan, Yan
  • Hu, Youxin
  • Gao, Ping

Abstract

Informal credit markets are very active in many developing countries including China. Informal financial associations have become a major channel of borrowing. Using data from the 2006 Rural Household Survey, this paper investigates farmers’ borrowings from both formal and informal sources with higher/lower interest, by looking into both demand and supply of loan. Consistent with the theory and previous studies, age follows an inverted U-shaped pattern in its relationship with the probability of borrowing from informal loan with higher interest. Our study shows that the impact of age disappears for the formal loan participation. In addition, high income and saving imply lower credit constraints. Moreover, household and county characteristics and financial conditions have a large and varying influence on farmers’ borrowing behavior.

Suggested Citation

  • Yuan, Yan & Hu, Youxin & Gao, Ping, 2011. "Farmers’ Choice and Informal Credit Markets in China," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103887, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:103887
    DOI: 10.22004/ag.econ.103887
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    Cited by:

    1. David Mhlanga, 2020. "Industry 4.0 in Finance: The Impact of Artificial Intelligence (AI) on Digital Financial Inclusion," IJFS, MDPI, vol. 8(3), pages 1-14, July.

    More about this item

    Keywords

    Agricultural Finance; Community/Rural/Urban Development; International Development;
    All these keywords.

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