The Impact Of Financial Literacy On Farmers' Demand For Formal Credit

As an important part of human capital,financial literacy will affect the formal credit demand of traditional farmers and family farms to a certain extent.However,Is the impact significant? Is the impact on the formal credit demand of traditional farmers and family farms different? These problems need to be solved.Research on these issues helps us to understand and improve the financial literacy of traditional farmers and family farms.It is also conducive to finding measures to solve the problem of formal credit demand of traditional farmers and family farms from the perspective of financial literacy.Based on the theory of human capital and credit rationing,this paper elaborates the mechanism of financial literacy affecting the formal credit demand of traditional farmers and family farms.Then,using the data of questionnaire survey of traditional farmers and family farms conducted by the evaluation team of comprehensive rural financial service reform pilot project in Chengdu in 2017,this paper takes traditional farmers and family farms in Chengdu as the research object,and uses the factor analysis method and the total scoring method to measure the financial literacy index.Finally,on the premise of identifying the formal credit demand of traditional farmers and family farms in Chengdu,this paper uses Probit model and Heckman Probit model to analyze the impact of financial literacy on whether traditional farmers and family farms have formal credit demand,whether they have applied for formal credit and whether they have obtained formal credit.Through research,the following conclusions are drawn:(1)The financial literacy index of traditional farmers and family farms are about 36.00 and 41.99 respectively.The overall financial literacy level of family farms is higher than that of traditional farmers.But neither of them has a high level of financial literacy.Traditional farmers and family farms have relatively high financial literacy in terms of inflation,credit and savings,and relatively low financial literacy in terms of investment and financial services facilities.(2)Compared with traditional farmers,there is a larger proportion of credit demand,formal credit demand and applied for loans,a smaller proportion of formal credit,and a larger average value of formal credit in family farms.The most important ways for traditional farmers and family farms to obtain formal credit are personal credit loans and home equity mortgages.(3)Financial literacy significantly promotes traditional farmers' application for formal credit at the level of 1%,with a marginal effect of 0.0039;significantly promotes the family farmers' demand for formal credit at a level of 5%,with a marginal effect of 0.0021;significantly promotes family farms get the formal credit at a level of 1%,with a marginal effect of 0.0054;has no significant effect on whether traditional farmers have formal credit demand and whether they have access to formal credit;has no significant effect on whether family farms apply for formal credit.According to the research conclusions,four policy implications are put forward: targeted setting up financial knowledge promotion content,supporting schools to carry out basic financial education,training volunteers of financial knowledge propaganda,and speeding up the construction of rural credit system.