Nonlinear Effect Study On The Impact Of Rural Microfinance On Farmers’ Income

Rural micro-credit loans originated from Bangladesh and Indonesia. It is afinancial credit product granted to farmers with credit loans. Rura l micro-credit loansis an important mode for farmers, which has large coverage, high household rate, goodeconomic returns, significant effect of devoleping farmers’ income and fast capitalturnover. Currently, almost all rural credit cooperatives in more than2000counties setup microcredit business, helping nearly200million farmers receive small loanssupport. So whether to increase rural micro-credit loans can increase farmers’ income?What kind of working mechanism between them? Therefore, to clarif y the quantitativerelationship between the rural microfinance and farmers’ income, have undoubtedlyimportant theoretical value and practical significance for developing farmers’ incomeand promoting rural finance and rural economy.First,chapter1mainly introduces the researching background and siginificance,classify the related literature at home and abroad systematically, and then brieflyintroduces the research method, research content and framework and innovative pointof this article. Then,chapter2expounds basic theories related with rural financialdevelopment and farmers’ income. Chapter3elaborates on the credit status andcurrent situation of farmers’ income in rural areas and analyze the impact mechanism.Chapter4is the empirical analysis of the rural micro credit’s impact on the farmers’income based on PSTR model and further studies the regional differences of thisimpact. The last part summarizes the main conclusions of the empirical part and putforward the corresponding policy suggestions.This paper study the relationship between rural microfinance and farmers’income from a nonlinear perspective, using the PSTR model based on panel data from2002to2009in China. The result shows that there is a significant nonlinearrelationship between microfinance and farmers’ income, which changes according tothe changing scale of the rural economy. When the scale of rural economy is small,rural micro-credit would bring farmers revenue substitution effect, when the ruraleconomy across a certain scale, micro-credit would bring farmers revenue incomeeffect. Further threshold statistical analysis on provinces indicates that the elasticityof rural microfinance is different in in various regions. Compared with2002, thenumber of provinces and cities in eastern and central which crossed the threshold has a substantial increase. But only two western cities, Sichuan and Guangxi, crossed thethreshold. Therefore, the western provinces without crossing the threshold should stepup pace in economic development and promote the growth of the rural economy inorder to make the increasing income effect of micro credit further strengthened.