China credit constraints and rural households’ consumption expenditure

Changsheng Li, Liqiong Lin and Christopher E.C. Gan

Finance Research Letters, 2016, vol. 19, issue C, 158-164

Abstract: The paper explores the impact of credit constraints on rural households’ consumption expenditure in South China. Previous studies have ignored the endogeneity between the credit constraints and consumption expenditure. We use two instrumental variables to resolve this problem. Our results show 54.9% of the respondents are credit constrained. The instrument variable model results reveal that the percentage rural households’ consumption expenditures who are credit constrained is 7.34% less than those who are not credit constrained. These results suggest that relaxing the credit constraints helps to improve the rural households’ consumption expenditures in developing countries.

Keywords: Credit constraints; Consumption expenditure; Rural households; IV model (search for similar items in EconPapers)
JEL-codes: D12 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:19:y:2016:i:c:p:158-164

DOI: 10.1016/j.frl.2016.07.007

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