Effects of credit constraints on household productivity in rural China

Fengxia Dong, Jing Lu and Allen Featherstone

Agricultural Finance Review, 2012, vol. 72, issue 3, 402-415

Abstract: Purpose - The purpose of this paper is to examine the effect of credit constraints on agricultural productivity in China. Design/methodology/approach - Using data from a rural financial survey, a switching regression model is used to account for endogeneity and heterogeneity. Carter presents three ways that credit might affect the production functions; a shift along a given production surface by allowing an optimal level of inputs, a shift the production surface out by allowing the purchase of more efficient inputs, and the third is to increase net revenue by more intensive use of fixed inputs and resources. Thus, the effects of factors on agricultural productivity may not be independent of credit status; therefore, separate functions for credit‐constrained and non‐constrained households are examined. Findings - Empirical estimates of the impacts of credit constraints on agricultural productivity are provided for the Heilongjiang province, a major agricultural production area, in Northeast China. By removing credit constraints, average agricultural productivity was estimated to be increased by 75 percent. Under credit constraints, labor inputs, along with a farmers' education, cannot be fully employed because of an inappropriate mix of inputs. Research limitations/implications - Young farmers may not be able to leverage their comparative advantage for physically intensive farm work under credit constraints. Because of data limitations, the research does not include information on informal credit in the estimation, which may underestimate the effects of credit constraints. Originality/value - This study provides an analysis of the impacts of credit constraints on rural household productivity for the Heilongjiang province, a major agricultural production region, in Northeast China.

Keywords: Agricultural productivity; Chinese rural household; Credit constraint; Endogenous switching regression; Agriculture; Credit; China (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
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:eme:afrpps:v:72:y:2012:i:3:p:402-415

DOI: 10.1108/00021461211277259

Access Statistics for this article

Agricultural Finance Review is currently edited by Valentina Hartarska and Denis Nadolnyak

More articles in Agricultural Finance Review from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().