The link between credit markets and self-employment choice among households in rural China

Linghui Han and Denise Hare

Journal of Asian Economics, 2013, vol. 26, issue C, 52-64

Abstract: Our paper examines how credit markets operate through wealth to influence households’ entrepreneurial choices. Our results show that policy-led bank branch withdrawal in rural China has a significant negative impact on credit availability to rural households, though unexpectedly the effect is felt more strongly in informal than formal credit markets. Furthermore, we observe that self-employment is impeded by reductions in wealth associated with credit contraction. Policies which provide more and better formal financial services to rural households are predicted to increase the flow of credit, through both formal and informal channels, thereby supporting accumulation, diversification, and economic growth.

Keywords: Rural credit markets; Self-employment; Asia; China (search for similar items in EconPapers)
JEL-codes: O12 O16 O17 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:26:y:2013:i:c:p:52-64

DOI: 10.1016/j.asieco.2013.04.008

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