A Study Of Social Networks,Private Lending And Independent Entrepreneurship In Rural Families

In the process of entering the "new normal" of economic development,China is facing many problems,such as the downward pressure of economic growth,the increase of employment population and the shortage of labor market posts.Under this background,how to achieve sustainable economic development and provide more jobs to protect people's livelihood is one of the major problems that our government should solve at this stage.Financial Development Theory as well as Endogenous growth theory have argued that innovative entrepreneurs have a crucial role in economic development and employment promotion.Therefore,to encourage entrepreneurship innovation is an important way to achieve sustainable economic development.A large number of literature refer that credit constraints in rural areas is a vital reason to inhibit family entrepreneurship.Hence,it is an important way for rural families to get venture capital by easing financing constraints through private lending.At the same time,many scholars have empirically proved the significant role of social network informal system in promoting China's independent entrepreneurship under the circumstances of China's relationship society,especially in rural areas.However,most of the existing articles focus on two-variable relations,ignoring the role and mechanism of the informal finance as a mediationIn the rural areas based on kinship,geopolitical and industrial factors,family social network,village level social network and business social network are intertwined among each other.This paper focuses on the relationship between social network,informal finance and rural family self-employment,and whether social network has a consistent impact to rural families' self-employment.In order to test the relationship among "social network-private lending-the independent entrepreneurship of rural families",this paper refer to the previous literature using the data of the Chinese Family Finance Survey(CHFS)in 2013 to carry out an empirical study.In addition,the variable of 'family relationships(renqing)revenue plus expenditure' and‘family relationships(renqing)expenditure' are used as proxy indicators for social network;the use of 'if self-employ in business' and 'if actively participate in the project management' are used as proxy indicators for family self-employment choice;'entrepreneurial business income' and 'entrepreneurial projects net profit' are used as proxy indicators for family entrepreneurial performance;'if there is other loans apart from bank' and 'the amount of informal finance loan' are used as proxy indicators for informal finance.In order to solve the possible endogenous problems,this paper uses the "family annual communication cost" as a tool variable to test the accuracy of the empirical results.The research results show that:firstly,the social network can effectively promote rural family entrepreneurial social network selection,the greater the size of the rural family,the possibility of engaging in non-agricultural field independent entrepreneurial projects more;secondly,the social network of the rural self-employed family private lending f nancing amount and the proportion of rural households have significant positive correlation.Informal finance funds through social networks,so as to reduce the entrepreneurial process due to the lack of its own funds and the financing constraints faced and further improving the possibility of self-employment.The mechanism of ' social network,informal finance and rural family self-employment' is tested.Finally,social network has consistent effects on rural family self-employment and has a significant positive impact on their family entrepreneurial performance.Therefore,this paper gives the following suggestions:(1)to increase rural family entrepreneurship policy guidance and financial support;(2)the formal financial institutions should adhere to the principle of inclusive credit approval procedures,optimization,lower credit threshold;(3)the government and the formal financial institutions should strengthen cooperation and jointly create a favorable business environment;(4)to carry out rural family business training and entrepreneurial guidance,improve rural family entrepreneurial performance.