The Empirical Analysis Of The Effect Which Farmers Credit Brings To Their Income Under Credit Constraint

There is a common basic issue in rural financial market in developing countries: financial institutions being unable to meet the credit needs of farmers effectively. The countryside in China now faces great challenge in financial market, along with the economic restructure. The northeast areas of China occupy 17.63 percentages of arable, making it a large agricultural foundation. This paper examines the cause of credit constraint and characters concerned of farmers with the consideration of both credit demand and credit supply. There are many factors resulting in the credit demand as well as credit supply. It's imperative to find out relevant characters to study the credit demand and credit supply.In the context of credit constraint, it's essential to pay sufficient attention to the efficiency of loans. This paper analyzes the efficiency of loans in rural areas with the 510 pieces of questionnaire in 2009 as samples. With the purpose of confirming the stability of the results, this paper uses Quantile Regression method to avert the difference, simultaneously, uses instrumental variable to avoid the endogenesis of model. The core structure is as follows:The first chapter introduces the background, the significance of the issue as well as the research methods and the problem to solve.The second chapter reviews the relevant study at home and abroad, from which summarize the clues and methods of study.The third chapter confirms the existence of credit constraint in rural areas in China with the data from"field survey"as sample. The result shows that the poorer the farmer is, the more credit constraint exists. Then, this paper discusses the factors contributing to the credit constraint from the perspective of two dimensions, that is, credit demand and credit supply.The forth chapter examines the relationship between the credit funds and its income efficiency with the result of chapter three as a basis. The result shows that the income efficiency of credit funds differs from person to person. The middle-income households own the higher income efficiency. The low-income households possess lower income efficiency account for its consuming purpose. The high-income households'income efficiency is lower owing to large amount of loan obtained. All of the results may provide suggestions to the financial institutions.The last part puts a summary to this paper. This paper confirms the existence of credit constraint in rural areas in China. There is a positive correlation between credit and growth in income, which is most significant in middle-income. Whether borrowing funds for consumption or production, it's decisive that the positive correlation exists owing to the replacement of funds. Therefore, the government ought to promote the rural education, health care and social security system from the outside of financial institutions, to reduce the credit need of farmers. Besides that, the government should formulate policies to reduce the outflow of rural funds to alleviate the credit constraints.From the empirical analysis, three basic conclusions can be made as follows.Firstly, it's the cast that there is credit constraint in rural areas. The poorer the farmer is, the more credit constraint exists. 20% of the lowest income households get only 2.5% percent of total loans, while 20% of the highest income households obtain 49.6% percent of total loans.Secondly, the factors influencing the credit constraint include the age of the head of household, education level, arable land, the distance from the nearest lender available as well as whether some accidents occur in 2009. Whether some accidents occur in 2009 has a positive correlation with both credit demand and credit supply. Arable has a positive correlation with credit supply. The age of the head of household has a negative correlation with credit demand.Thirdly, the loans from either formal or informal financial institutions are capable of increasing the income of households through alleviating the credit constraint, promoting the investment. The income efficiency of credit funds differs from person to person, which is significant positive to middle-income, while not obvious to high-income and low-income households.