Research On The Impact Of Financial Literacy On Farmers’ Entrepreneurial Behavior

Entrepreneurship is an important driving force for economic development.Farmers’ entrepreneurship can not only stimulate rural economic activities,drive rural industrial restructuring,and improve the employment paths and quality of life of rural.There is no doubt that rural entrepreneurship requires the integration of multiple resources such as capital,basic entrepreneurial knowledge and production factors,especially the entrepreneur’s overall grasp of the entrepreneurial industry and personal talent are the key factors to promote rural entrepreneurial behavior,but for rural areas,entrepreneurial vitality has not been effectively stimulated,and the entrepreneur’s personal talent is limited by multiple factors,and financial literacy,as an important part of the entrepreneur’s personal Financial literacy,as an important part of entrepreneurial talent,has a profound impact on individual entrepreneurial behavior.In this context,financial literacy may be the key to stimulate entrepreneurial dynamics and enhance entrepreneurial motivation in rural areas.Therefore,it is important to investigate how financial literacy affects the entrepreneurial behavior of farmers and how it affects them.Based on the 2019 China Household Finance Survey(CHFS)data,this paper firstly constructs a financial literacy index in terms of financial knowledge and financial skills,and measures the financial literacy level of the sample farmers based on the factor scores,and then conducts an empirical analysis using the Probit and IV-Probit models.The core explanatory variable of this paper is financial literacy,and the explanatory variable is entrepreneurial decision of farmers.In order to exclude the influence of reverse causality between variables on the empirical results,this paper uses the average financial literacy of community residents as the instrumental variable for endogeneity testing.In addition,after conducting robustness tests on the empirical analysis,the paper continues to empirically analyze the indirect paths through which financial literacy affects farmers’ entrepreneurial behavior,i.e.,the indirect mechanism of the role of risk preferences and education and training expenditures in the relationship between financial literacy affecting farmers’ entrepreneurial decisions.Finally,the following conclusions were drawn.(1)The results of the empirical analysis using the Probit model show that the effect of financial literacy on farmers’ entrepreneurial behavior is significant at the 1% significance level,and there is a robust positive effect.(2)The effect of financial skills on entrepreneurial behavior is significantly greater than that of financial knowledge.In this paper,financial knowledge and financial skills are empirically analyzed with entrepreneurial behavior,and both of them have significant positive effects on entrepreneurial behavior,and the marginal effect coefficients of financial knowledge and financial skills are 2.65% and 7.43%,respectively.(3)Risk preference and education and training expenditure play a partly mediating role in financial literacy on farmers’ entrepreneurial behavior.First,financial literacy can influence farmers’ individual risk preference,and the increase of financial literacy will lead to an increase of some risk preferences,specifically,some risk averse farmers change to risk preferences or risk neutral,so that when facing riskier entrepreneurial activities,the tendency to choose to start a business will be greater.Second,financial literacy has a positive effect on farmers’ education and training expenditures,which in turn makes farmers value entrepreneurship training,have a clearer and deeper understanding of entrepreneurial activities,and thus are more inclined to engage in entrepreneurial behavior.