Research On The Effect Of Agricultural "Insurance + Credit" On Farmers’ Income

The No.1 Central Document issued in 2009 proposed for the first time to "explore the establishment of an interactive mechanism of bank insurance combining rural credit and agricultural insurance".Central government document No.1 by 2022 stresses the continued role of agricultural credit and agricultural insurance in helping farmers,and agricultural insurance and agricultural credit will play an increasingly important role in supporting and benefiting agriculture.Agricultural production is characterized by strong seasonality,long cycle,great influence by natural weather,and large fluctuations in the price of agricultural products,which brings great uncertainty to the income of farmers,and thus banks are faced with certain credit risks when providing loans to farmers.Agricultural insurance guarantees the income of farmers in production and operation,and indirectly reduces the non-performing loan ratio of banks to some extent.The income guarantee brought by agricultural insurance also stimulates the new demand of farmers to borrow from rural credit institutions,and then stimulates the new power of insurance needed to increase agricultural income and output,This promotes a virtuous cycle of sustainable and healthy development of insurance companies,banks and other financial institutions.In summary,the correlation between agricultural credit and agricultural insurance creates conditions for the interaction between the two.Although China’s agricultural "insurance + credit" pilot work has made some achievements,but it is still in the initial stage,there are still many challenges to be solved.Meanwhile,most farmers are still in a kind of "bottleneck" where it is difficult to get loans and less protection because the interaction mechanism of bank and insurance has not been fully implemented everywhere.On the one hand,it is difficult for some farmers to obtain loan support because of the lack of effective collateral.Moreover,due to various restrictive factors,it is difficult for credit institutions to effectively evaluate the credit degree of farmers,which makes agricultural credit impossible for farmers,this has also hindered the development of rural credit institutions to some extent.On the other hand,the limitations of late start-up development in rural areas and the defects of farmers themselves,such as weak risk awareness,low education level,lack of demand for agricultural insurance,resulting in the lack of effective insurance protection when the risk comes,but also let the development of Chinese insurance companies in the agricultural insurance market repeatedly frustrated.Therefore,through theoretical analysis and empirical test,to explore the linkage model of agricultural insurance and agricultural credit on the impact of farmers’ income,clear the internal mechanism of agricultural credit and agricultural insurance linkage support agriculture,analyze the current situation and problems of the linkage of "insurance+ credit" and propose the improvement path.This paper provides some ideas for improving farmer household income for agricultural insurance and agricultural credit cooperation.Based on the constructed research framework,the main research of this paper includes the following six parts:Chapter One,introduction.Guided by the rural revitalization policy and under the guidance,and the most important task in the new period,this chapter explores the interactive mode of agricultural insurance and agricultural credit,establishes the research theme,and discusses the research significance from the perspectives of improving the rural financial mechanism and helping the high-quality development of agriculture and rural areas.By collecting a large number of domestic and foreign literature and in-depth reading comprehension of the review content,the paper sorts out the research process of the effect of agricultural insurance and agricultural credit on farmers’ income.Then the research ideas and the framework of the paper are summarized,and the research content is elaborated according to the content structure of the paper,while the research methods used are described,and finally the innovations and defects of the paper are outlined.Chapter two,related concepts and theoretical basis.After explaining the four core concepts of agricultural insurance,agricultural credit,farm household income and effects,this chapter elaborates four typical theories,namely,information asymmetry theory,credit rationing theory,financial symbiosis theory and synergistic effect theory,and analyzes them with the focus of this research paper,for later analysis of the mechanism of the fourth chapter and the fifth chapter the empirical inspection laid the foundation of theory and practice.Chapter three,agricultural "insurance + credit" synergistic advantages and domestic and foreign practice reference.This chapter first sorts out the possible synergistic advantages of agricultural "insurance + credit",then takes the evolution of China’s agricultural "insurance + credit" policy as a starting point,reviews the typical cases of agricultural "insurance + credit" interaction carried out in some regions of China,and analyzes the development status and difficulties of China’s agricultural "insurance + credit".At the same time,international agricultural insurance and agricultural credit linkage cases are added to supplement international experience,and finally,based on the experience of the world and the situation in China,beneficial inspiration is drawn.Chapter four,the mechanism analysis of agricultural insurance and agricultural credit’s effect on peasant household income.Firstly,the mechanism and effect of the interaction between agricultural insurance and agricultural credit are explored separately from a "one-to-one" perspective.Then to further verify the role of rural financial instruments on farm household income,the impact of both on the urban-rural income gap is explored in terms of this relative value of the urban-rural income gap.Finally,"two to one" focuses on exploring the internal logic and mechanism of agricultural "insurance + credit" to boost farmers’ income.By taking the internal logic of agricultural insurance and agricultural credit as single factors affecting income separately as a starting point,to steadily promote in-depth study of agricultural "insurance + credit" dual factors to increase income mechanism.In this research stage,corresponding research hypotheses are proposed for the possible effects of agricultural insurance,agricultural credit and farmer’s income.Chapter five,the experimental analysis of the effect of agricultural "insurance+ credit" on farmers’ household income.Then,control variables are added to do the benchmark regression of agricultural insurance and agricultural credit on the per capita disposable income of farmers,and then add the control variables for the fixed effect test.Since the lag item of the dependent variable in the panel model may be related to the interference item,the system GMM estimation model is introduced for the empirical test,and based on the urban-rural income gap to do further empirical discussion.Then,product coefficient method and bootstrap test were used to test the mediating effect of agricultural credit,so as to verify the hypothesis.Then the regional heterogeneity of the effects of agricultural insurance and agricultural credit on the per capital discretionary income of rural householders was analyzed.Finally,the heterogeneity test and robustness test were carried out.Chapter six,conclusion and suggestion.Through the previous theoretical combing,mechanism analysis and empirical testing,the conclusions of this paper are summarized: First,agricultural insurance and credit can promote the increase of farmers’ income,and there is a synergistic relationship between the two financial instruments,and at the same time can effectively promote the income of farmers and alleviate the imbalance between urban and rural development;Second,when farmers use agricultural tools to increase production or improve production capacity,it will lead to certain internal and external effects,expansion of agriculture,forestry and fisheries,improve land utilization and productivity,build disaster prevention instruments or appropriate pesticide spraying,optimize the industrial structure,reduce the scope of use of mechanical power,etc.,which can improve farmers’ income;Third,It is agricultural insurance that affects farm household income levels by influencing agricultural credit as a mediating variable.Fourth,there are certain differences in the income increasing effects of agricultural insurance and agricultural credit in different regions.Agricultural insurance has a significant income increasing effect in the central region,and agricultural credit has a significant income increasing effect in the eastern region.Both of them have there is a powerful active contribution on the income of farmers in the western region.Increased government agricultural insurance premium subsidies help hedge food crop risk and improving the income of farmers.This paper focuses on whether agricultural insurance and agricultural credit play the role of increasing income and reducing poverty,whether there is linkage effect between them,what is the internal logic of linkage effect,and how to put forward suggestions for optimizing and improving rural financial development in the future according to the research conclusions.The first innovation point of this paper is that by analyzing the interaction mechanism between agricultural insurance and agricultural credit and the internal mechanism of income increase and poverty reduction under the linkage effect,a complete roadmap of the role of agricultural "insurance + credit" in helping farmers’ income is preliminarily constructed.Second,it introduces the urban-rural income gap as an object of study and makes corresponding suggestions for the development of agricultural "insurance+credit" in China.Thirdly,the systematic GMM estimation method based on dynamic panel data can better avoid the potential endogeneity problem,correct the undetected heterogeneity and omitted variable bias,and make an economic explanation for the impact of agricultural "insurance + credit" and other factors on farmers’ income;At the same time,the test of mediating effect in many literatures still stays in the product coefficient method.In this paper,Bootstrap test is introduced to improve the persuasion of empirical results to a certain extent.