An Empirical Analysisofthe Impactofloans On Rural Household Incomein China

The Communist Party of China and the government have always been focusing on three issues of agriculture,the countryside and farmers.The core of three rural issues is the problem of farmers’ income.In recent years,the CPC and the government clearly pointed out that theymust rely on rural finance to promote the rural economy.It is proposed to make good use of the rural finance to effectively improve the income level of farmers.There are formal financial institutions and informal loans in China’s rural financial market.At the same time,the composition of Chinese farmers’ income in the new century has changed a lot,and the non-agricultural and diversified features have become more and more obvious.Therefore,it is still significant to study the effect of Chinese rural finance on farmers’ income and the internal mechanism in the new situation.Firstly,this paper summarizes the theory and achievements of the current situation of farmers’ loansand farmers’ income in China,the relationship between farmers’ loans and farmers’ income,finding the achievements and shortcomings of the current research.Secondly,the concepts of farmers,farmers’ loans and farmers’ income are redefined.Then,this paperregards the predecessors of the theory and results as the theoretical support of this article.In the empirical analysis,this paper is based on the data of farmer micro-panel published by Peking University,and runs the fixed effect model.Then this paper explains the model results.Finally,this paper summarizes the main conclusions,and then puts forward the corresponding policy recommendations.Compared with the existing literature,this paper has the following possible innovations.First of all,it examines the effect of different loans on the farmers’ income,and thenexplores the influence of the farmers’ loans from two channels on the different income of the farmers.Secondly,this paper sets the dependent variables of the empirical study part into the income of the farmers,adding the annual dummy variables and the interaction between the householders’ education and the annual dummy variables,examining the time trend of the farmers’ income and the return of the education.The results show that the formal financial loans had a significant positive effect on the net income of the households.The impact of formal financial loans on farmers’ income had significant differences between regions in China.Informal financial loans had a negative effect on the operating income of farmers.In the central region,informal financial loans had a relatively small effect on farmers’ operating income.Formal financial loans and informal financial loans did not have a significant impact on migrant workers’ income.Therefore,the Rural Credit Cooperatives and other formal institutions should be issued more rural loans.The government should allow the establishment of more civil institutions,and should implement different financial development policies in different regions of China.Compared with 2009,the influence of farmer’s education on the net income and working income changed little in time and even weakened.Therefore,the government should strengthen the training of migrant workers,transforming the migrant workers’ education into human capital,improving their income.