An Analysis of the Factors Influencing Choice of Microcredit Sources and Impact of Participation on Household Income

Zhao Ding and Awudu Abdulai

Journal of International Development, 2020, vol. 32, issue 4, 505-525

Abstract: It is widely accepted that rural microcredit has the potential to contribute to poverty reduction in developing countries. This paper examines the factors that affect rural residents' decisions to participate in different types of microcredit sources and how these factors influence household income and consumption, using cross‐sectional data from a recent survey in China. We use a multinomial endogenous switching regression model to account for selection bias and treatment effects. The empirical findings indicate that family size, dependency ratio, local casual wage rate, credit information and shocks mainly determine the selection of different credit sources. Furthermore, the estimates reveal that participation of households in microcredit programmes contributes to an increase in both per capita income and consumption significantly. © 2020 John Wiley & Sons, Ltd.

Date: 2020
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https://doi.org/10.1002/jid.3466

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jintdv:v:32:y:2020:i:4:p:505-525

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