 Can land transfer relax credit constraints? Evidence from ChinaConghui Chen, Bing Liu and Ziyou Wang Economic Modelling, 2023, vol. 122, issue C Abstract: Although many studies have examined what drives credit constraints and their negative impact, evidence on the mechanism of relaxing credit constraints is scarce. This paper explores effective solutions to help households improve their access to credit. Using the China Family Panel Studies data from 2018, we employ an endogenous switching probit model to examine whether and to what extent land transfer can ease credit constraints. We find that households that transfer their land in or out are, respectively, 31.4% or 21.4% less credit constrained than those that do not. Participation in land transfers can improve borrowers’ financial situations through income increases and pledging assets as collateral, alleviating both formal and informal credit constraints. Our results suggest that any government initiatives to promote the efficiency of land transfer to ease credit constraints can help boost economic growth in China. Keywords: Land transfer; Credit constraints; Collateral and income mechanism (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:122:y:2023:i:c:s0264999323000603 DOI: 10.1016/j.econmod.2023.106248 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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