Rural development in the digital age: Does information and communication technology adoption contribute to credit access and income growth in rural China?

Wanglin Ma, Huanguang Qiu and Dil Rahut

Review of Development Economics, 2023, vol. 27, issue 3, 1421-1444

Abstract: Information and communication technology (ICT) plays an important role in rural livelihoods and household well‐being. Therefore, this study examines the impact of ICT adoption on farmers' decisions to access credit and the joint effects of ICT adoption and access to credit on household income using 2016 China Labour‐force Dynamics Survey data. Both recursive bivariate probit model and a selectivity‐corrected ordinary least square regression model are employed for the analysis. The results show that ICT adoption increases the probability of access to credit by 12.8% in rural China and empowers rural women and farm households in relatively less‐developed regions to access credit. ICT adoption and access to credit affect household income differently. ICT adoption significantly increases household income, while access to credit significantly reduces it, primarily because farmers do not use the acquired credit to invest in income‐generating farm and off‐farm business activities. ICT adoption has the largest positive impact on household income at the highest 90th quantile. Our findings suggest that improving rural ICT infrastructure to enhance farmers' ICT adoption and developing ICT‐based financial products to enable households to access sufficient funds can improve rural household welfare.

Date: 2023
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