Rural credit and new technology adoption among family farms: evidence from two demonstration areas in China

Qianling Wang, Li Gui (), Qianyue Meng, Huichuan Wang and Jingwen Hu
Additional contact information
Qianling Wang: Wuhan University economics and management school
Li Gui: Hubei university of economics and management
Qianyue Meng: Wuhan University economics and management school
Huichuan Wang: Wuhan University economics and management school
Jingwen Hu: Wuhan University economics and management school

Palgrave Communications, 2025, vol. 12, issue 1, 1-13

Abstract: Abstract This study examines the impact of formal and informal credit participation on the adoption of new technologies by family farms. Drawing on micro-survey data from two demonstration areas in China —Wuhan (Hubei Province) and Langxi (Anhui Province)—the analysis employs the propensity score matching (PSM) method for empirical identification. The results show that formal credit serves as a key driver of technology adoption. Specifically, formal credit is strongly associated with the uptake of capital-intensive, low-risk technologies, whereas informal credit is more relevant for the adoption of low-capital, high-risk technologies. Further analysis reveals significant heterogeneity in credit effects across farm sizes. Large farms, with greater collateral capacity, tend to access formal credit to invest in mechanization, whereas small farms rely more on short-term informal loans to meet liquidity needs. The structure of credit instruments also plays a critical role. Collateral-backed loans effectively support mechanization on large farms but may lead to credit misallocation for small farms. Short-term credit facilitates small-scale technology adoption by easing liquidity constraints. In contrast, the effects of long-term credit vary notably across regions. Overall, the findings highlight the complementary roles and structural differences of formal and informal finance in agricultural technology adoption. They offer theoretical insights for designing a tiered rural credit system and for developing differentiated financial support policies.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41599-025-05491-7 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-05491-7

Ordering information: This journal article can be ordered from
https://www.nature.com/palcomms/about

DOI: 10.1057/s41599-025-05491-7

Access Statistics for this article

More articles in Palgrave Communications from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().