A Positive Analysis On The Impact Of Different Credit On Rural Household Income

"Agriculture development, rural enhancement and increasing farm income." Which is a important focus on building a well-off society. At the moment, increasing farmer income is key problem, which is concerned by our government. With the rural economic development, agricultural population move to non-agricultural fields, industrial structure adjustment at a very rapidly speed, all these production operation behavior have a great need to a great deal of capital, therefore, the credit demand of rural household is enlarged gradually. The behavior of rural household credit has relation with increase rate and growth potential.However, with the influence of financial repression and dual financial structure, because of rural financial system deletion, it is difficult to satisfy rural household credit demand. On the one hand, the supply of Chinese rural financial is deficiency. With the reformation of rural financial system, stated-owned commercial bank shrink to central city, withdraw and combined with the branches which are from county level or below county level. On the other hand, as the demand subject of rural financial market, rural household have their own defects which lead to the diversification of rural household demand, compared with the monopolistic and unitarily of financial institutions fund supply. In this condition, rural household have to depend on informal financial. To some extent informal financial remedy the deficient, relief the gap between credit demand and credit supply. So, at present our rural credit market present formal financial and informal financial coexist. The paper studies the impact of formal financial and informal financial on the rural household income so that provide the real situation of the rural credit and feed the information to the development of formal financial and informal financial.According to GDP, the development of economic and some circumstance of five cities in northern area of Jiangsu,675 samples are selected and we acquire the data of their credit behavior. Both qualitative and quantitative methods are used in this study. This study analyzed borrowing scale usage incidence and credit feature with different income level, in order to predict to the relation between credit and income. In order to study the relation between credit and income, we use one econometric model namely least square method (OLS) to study formal financial and informal financial welfare effect.The major findings of the study are:the capital of rural household comes from informal financial market, informal financial has the ability to satisfy rural household diversification demand, which has important role in rural industrial and northern Jiangsu area economy growth. When come to the usage of capital, no matter what formal financial and informal financial, the proportion in living is much more than that in production. These two kinds of credit could increase rural household income level in direct and indirect way. According the result of econometric model, when formal credit increase 1000 Yuan, rural household income increase 364 Yuan; when informal credit increase 1000 Yuan, rural household income increase 230 Yuan, in conclude, the welfare effect of formal financial and informal financial.