The Effect Of Farmers' Financial Literacy On Internal Mechanism Of Formal Credit Acquisition In Ethnic Areas

The development of the rural economy and the increment of farmers' income cannot be separated from the support of funds.Especially in the context of the current comprehensive construction of a well-off society and the strategy of rural revitalization,financial support is even more important.As part of the modern financial system,rural finance is the core force serving the "agriculture,rural areas and farmers" issues.However,due to the existence of credit constraints,farmers have always faced the difficulty in loans.Most of the areas where ethnic minorities live are located in remote areas of China.Due to the relatively backward economy,low income security of farmers,and relatively closed information,farmers in ethnic areas are subject to severe formal credit constraints.A stumbling block has seriously impeded the realization of China's rural revitalization and the goal of building a well-off society in an all-round way.Therefore,it is particularly important to reduce the formal credit constraints of rural households in ethnic areas and improve the level of formal credit access for rural households.Financial literacy,as a kind of human capital of the family,is also a reflection of the individual's financial cognition ability.It has a direct and indirect impact on family credit decisions.Farmers 'participation in financial markets,distribution of household gold and financing,and improvement of household wealth have an indirect impact on farmers' credit decisions.Based on this,this paper uses the data from the China Household Financial Survey(CHFS)in 2015 and uses the Probit model to take rural households in ethnic areas as research objects to conduct theoretical and empirical research on the impact of financial literacy on farmers' formal credit access and internal mechanisms.This article mainly draws the following conclusions:(1)The level of formal credit access for rural households in ethnic areas is low.Farmers' financing is still mainly based on informal financial channels.Farmers face severe formal credit constraints.Farmers are subject to demand-level constraints that are higher than supply-level credit constraints,and effective formal credit demand.(2)The financial literacy level of rural households in ethnic areas is generally low,and the gap is large;the financial literacy level of males inthe sample rural households is higher than that of females;the higher the education level of the household head,the higher the financial literacy level,but the education level It does not replace financial literacy,and the age of the farmer also has an impact on financial literacy(3)The improvement of farmers' financial literacy level can significantly promote farmers' access to formal credit,and can increase farmers' effective formal credit demand,reduce farmers' potential formal credit demand,and promote the conversion of farmers' potential formal credit demand into effective formal credit demand;Further analysis of the reasons for the potential formal credit demand of the farmers found that the increase in the financial literacy level of the farmers can reduce the possibility of the potential formal credit needs of the farmers because they do not know how to apply for loans or have cognitive bias;An empirical analysis of the willingness of farmers to obtain financing channels without formal credit demand shows that the improvement of financial literacy can significantly promote farmers' preference for formal financial channels.Finally,according to relevant research conclusions,from the perspective of the government,rural financial institutions,and farmers themselves,policy suggestions to improve the financial literacy of farmers in ethnic areas and improve the loan mechanism of formal financial institutions are proposed to improve the financial literacy of rural households in rural areas and optimize borrowing policies.Theoretical basis and decision-making reference.