Rural development in the digital age: Does information and communication technology adoption contribute to credit access and income growth in rural China?

Information and communication technology (ICT) plays an important role in rural livelihoods and household well-being. Therefore, this study examines the impact of ICT adoption on farmers' decisions to access credit and the joint effects of ICT adoption and access to credit on household income using 2016 China Labour-force Dynamics Survey data. Both recursive bivariate probit model and a selectivity-corrected ordinary least square regression model are employed for the analysis. The results show that ICT adoption increases the probability of access to credit by 12.8% in rural China and empowers rural women and farm households in relatively less-developed regions to access credit. ICT adoption and access to credit affect household income differently. ICT adoption significantly increases household income, while access to credit significantly reduces it, primarily because farmers do not use the acquired credit to invest in income-generating farm and off-farm business activities. ICT adoption has the largest positive impact on household income at the highest 90th quantile. Our findings suggest that improving rural ICT infrastructure to enhance farmers' ICT adoption and developing ICT-based financial products to enable households to access sufficient funds can improve rural household welfare.     

An econometric application of the theory of the farm-household

Employing a Cobb-Douglas specification for the production function and a modified linear expenditure system, the paper presents an econometric model of household production, consumption and labor supply behaviour for a semi-commercial farm with a competitive labor market. The model, estimated from primary, cross-sectional, Malaysian data, is used to analyse the impact of migration, output price intervention and technological change on the agricultural sector. In doing so, the wage-rate is treated as an endogenous variable to be determined by the interaction of aggregate labor demand and supply curves obtained from the estimated micro functions.     

Real Estate Market Policy and Household Demand for Housing

This paper used an estimated mixed multinomial logit model of household housing demand to examine the impact of four housing market‐related policies on a stated preference survey sample. The estimated demand probability function suggested that household choice behaviour does show huge heterogeneity. The estimated results were then employed to examine the effects of the policies. We estimated the potential disequilibrium between demand and supply under the construction‐size‐limitation policy, demonstrated that the efficient movers' subsidy increases along with the household income, and simulated the changes in housing demand when tax policy is changed. We demonstrate the potential usefulness of our modelling framework in assisting policy‐making decisions. Our model also partially explains the failures and controversies of the latest real‐estate intervention policies in China.     

农村居民点用地变化驱动机制——基于湖北省孝南区农户调查的研究

以地处江汉平原的孝南区为研究区域,利用对农户的问卷调查资料,采用回归分析方法,对农村居民点用地变化驱动机制进行研究。得到如下结论:①显著影响农户是否新辟地基建房的因素包括:家庭规模、家庭收入/信贷水平、对子女教育的支出、攀比心理等因素;②农户新辟地基建房面积的大小受到家庭规模、非农就业人口比例、家庭收入/信贷水平、对子女教育的支出、消费的攀比心理等因素的影响。     

Fertility choice and financial development

We study the consequences of broader access to credit and capital markets on household decisions over the number of children. A model of the net reproduction rate is estimated on data from 78 countries over the period 1995–2010. Liquidity constraints are approximated by private credit and household credit, while opportunities for financial investment are measured by domestic public debt. We use the Index of Financial Liberalisation (Abiad et al., 2009) as one of the instruments for financial variables. We find that improved access to credit increases fertility with an elasticity of around 30%, while the effect of the development of capital markets is negative (–10%). The regression model takes the role of social security into account. Quantile regression shows that our results are robust to outliers and parameter heterogeneity.     

Econometric analysis of credit constraints of chinese rural households and welfare loss

Using recent survey data of Chinese rural households, we estimate the impact of credit constraints on Chinese rural households’ income and consumption. Results reveal that 71% of rural households are rationed in the credit markets. The credit constraints have significant negative effects on the income and consumption of rural households. The expenditures on education and medical treatments, the size of land holdings, household head education and the balance of financial capital all affect the demand of credit. Personal connections (relationship) are the most important determinate of the supply for credit.     

Estimating the Impact of Climate Change on Agriculture in Low-Income Countries: Household Level Evidence from the Nile Basin, Ethiopia

This paper presents an empirical analysis of the impact of climate change on agriculture in a typical developing country. The economic implications of climate change are estimated by using both a farm productivity and a Ricardian framework. Data are drawn from about 1,000 farms producing cereal crops in the Nile Basin of Ethiopia. The thin plate spline method of spatial interpolation was used to predict household specific rainfall and temperature values using meteorological station data collected for 30?years across the regions. We found that climate change adaptation has a significant impact on both farm productivity and farm net revenues. We complement the analysis by providing an estimation of the determinants of adaptation. Extension services (both formal and farmer to farmer), as well as access to credit and information on future climate changes are key drivers of adaptation.     

Impact of Education on Household Welfare in Nigeria

Human capital development, especially higher educational attainment, attaches high premium to its expected economic benefits, in form of better welfare. This study investigates the effect of educational attainment of household head on two indicators of household welfare, namely labour market earnings and household per capita total expenditure on food and non-food items in Nigeria. The study uses the Double Hurdle (DH) model and Quantile Regression (QR) to address these objectives. The empirical results show that returns to schooling are substantially higher at the tertiary level of education compared with primary, secondary, and postgraduate levels of education in Nigeria. Furthermore, additional years of tertiary education attainment by household heads was found to increase household per capita total expenditure more than additional years of primary, secondary and postgraduate education. The implication of these findings is that the improvements in economic welfare of households in Nigerian is driven more by the attainment of tertiary education by household heads, relative to other levels of education.     

Why don't banks lend to Egypt's private sector?

Bank credit to Egypt's private sector decreased over the last decade, despite a recapitalized banking system and high rates of economic growth. Recent macro-economic turmoil has reinforced the trend. This paper explains the decrease based on credit supply and demand considerations by 1) presenting stylized facts regarding the evolution of the banks' sources and fund use in 2005 to 2011, noting two different cycles of external capital flows, and 2) estimating private credit supply and demand equations using quarterly data from 1998 to 2011. The system of simultaneous equations is estimated both assuming continuous market clearing and allowing for transitory price rigidity entailing market disequilibrium. The main results are robust to the market clearing assumption. During the global financial crisis, a significant capital outflow stalled bank deposit growth, which in turn affected the private sector's credit supply. At the same time, the banking sector increased credit to the government. Both factors reduced the private sector's credit supply during the period under study. After the trough of the global crisis, capital flowed back into Egypt and deposit growth stopped being a drag on the supply side, but bank credit to the government continued to drive the decrease in the private sector's credit supply. Beginning in the final quarter of 2010, capital flows reversed in tandem with global capital markets, and in January 2011 the popular uprising that ousted President Hosni Mubarak added an Egypt-specific shock that accentuated the outflow. Lending capacity dragged again, accounting for 10% of the estimated fall in private credit. Credit to the government continued to drain resources, accounting for 70–80% of the estimated total decline. Reduced economic activity contributed around 15% of the total fall in credit. The relative importance of these factors contrasts with that of the preceding capital inflow period, when credit to the government accounted for 54% of the estimated fall, while demand factors accounted for a similar percentage.     

The determinants of trade credit use: the case of the Tanzanian rice market

Most small businesses in the developing economies suffer from a lack of access to formal external finance. One important alternative source of finance for these entrepreneurs is trade credit. Applying a unique data-set containing data on specific trade relations between rice wholesalers and rice retailers in Tanzania, we analyse the determinants of trade credit demand and supply in this market, using a simultaneous equation modelling approach. The analysis shows that while the demand for trade credit is primarily determined by the extent to which retailers need external funds, supply is mainly driven by wholesalers’ incentives to attract and keep clients. Moreover, wholesalers’ willingness to provide credit increases if they have better information about the possibility that the customer will fail to repay the credit.     

Italian households’ debt: the participation to the debt market and the size of the loan

This paper analyses Italian households’ participation to the debt market, separating the probability of demanding a loan from the probability of being rationed by lenders; on the supply side of the market specific attention is paid to enforcement costs of the loan contract when customers default. A new result is that the age of the household head acts essentially as a demand factor, rather than a variable influencing the lender’s choice. Both current and future households’ income increase the demand for loans and reduce credit rationing. Self-employed workers are more rationed by lenders. Credit constraints are also linked to the area where the household lives, partly because of different enforcement costs. The final part of the paper analyses the equilibrium quantity of the loan, for households who have a loan and are not constrained. The loan size is positively linked to household net wealth and income profile. An important contribution of this paper is the finding that, not only the participation to the debt market, but also the loan size is negatively affected by enforcement costs.      

Access to credit and its determinants: A comparison of survey‐based measures

Measuring access to finance represents an important challenge in empirical studies. Due to data limitations, perception‐based indicators or the usage of finance are often used as approximations of access to finance. However, these approximations disregard firm‐specific differences in the demand for finance. We derive a direct measure of access to credit from firm‐level survey data and explicitly model credit demand. We study the determinants of access to credit and disentangle, in contrast to other measures, their effects on demand for and access to credit. We find that the usage of credit is not a sufficient approximation, while perception‐based indicators are surprisingly precise.     

Segmentation of Rural Labour Contracts: Some Further Evidence

The paper offers an explanation of labour tying commonly observed in seasonally agricultural economies. Employers may either hire regular labourers in the slack season to satisfy all or most of the labour demand in the high season but have underutilised labour in the low–demand season or rely on casual labourers only. Thus farmers hiring regular labour may also hire some casual labour as and when needed to minimise the hoarding costs of regular labour. Secondly, daily regular wages are usually lower than daily casual wages, but regular labourers usually get some wage–advance as well. Thus asset–poor workers have incentives to choose regular labour with interest–free wage advance because they face high marginal costs of credit in the segmented credit markets. The optimum hoarding costs decrease with increase in farm size, but increase with increase in spot market wages. However with improved availability of alternative employment opportunities and/or cheaper credit facilities to the asset–poor labourers, the supply of regular labour is likely to decline. Empirical evidence from the ICRISAT villages in south India seems to be consistent with the primary propositions of the model.     

Firm credit in the euro area: a tale of three crises

Using survey data from 2009 to 2011, we analyse the effects of the recent euro area economic, financial and private debt crisis on the supply of and demand for bank finance for small and medium enterprises (SMEs). At the country level, we identify three distinct aspects of the recent crisis in the euro area affecting firm credit through different channels. Controlling for country fixed effects, the impact of a weak real economy on firm credit operates both by reducing firms’ demand for bank financing and by lenders increasing loan rejections and tightening terms and conditions on credit allocated. On the other hand, financial conditions have no significant effect on demand, but they do affect credit supply as we find that financial tensions worsen the chances of obtaining credit and its terms and conditions. We interpret this as evidence of a bank balance sheet channel negatively impacting credit provision. We find that private sector indebtedness has important effects on SMEs’ credit access and its terms and conditions.     

MULTIVARIATE COINTEGRATION APPROACH TO THE DETERMINATION OF RESERVES AND BANK CREDIT: A CASE STUDY OF TURKEY*

The paper estimates both long-run reserves and long-run money demand equations using the multivariate cointegration approach. An economic model is constructed, based on the monetary approach to balance of payments in which the monetary authorities can control money supply through changes in bank credit. The vector auto-regressive methodology is used to derive latent equilibrium relationships, and the short-run error correction equations are estimated for both nominal money stock and reserves. A response function for the short-run changes in bank credit is developed. Given the institutional system and slow adjustments, a response function of changes in bank credit to lagged changes in reserves performs well for the period 1960–88.     

Household sectoral choice and effective demand for rural credit in India

An analysis of the ICRISAT data from three Indian villages raises concern about the extent of rationing mechanism inhibiting the spread of formal credit in rural India where a significant proportion of households do not have any outstanding loan or borrow from the informal sector only. A limited-dependent econometric analysis of the factors jointly determining household sectoral choice and effective demand for informal loan conditional on whether a formal loan is available suggests that compared to formal loan easy and adequate access and prompt recovery are significant determinants of the popularity and viability of informal rural credit among sample households; also some households substitute labour income to ease the extent of credit. Thus, rationing of the formal credit is not the only factor inhibiting the spread of formal credit in the study villages.     

Born like China,growing like China

This paper studies the effects of China's one‐child policy on saving and foreign reserve accumulation. Fertility control increases the saving rate both by altering saving decisions at the household level, and by altering the demographic composition of the population at the aggregate level. I show that demographically induced changes in saving explain the build‐up of a large foreign surplus in China. As in Song, Storesletten, and Zilibtti (2011), the model features contractual and financial market imperfections. Government‐owned firms are less productive but have full access to the credit market. Entrepreneurial firms are more productive but face credit constraints. As labour switches from less productive to more productive firms, demand for domestic bank borrowing decreases. As saving increases while demand for loans decreases, domestic savings are invested abroad, generating a foreign surplus. The model predicts that China's foreign reserve accumulation will soon begin to slow down in response to recent relaxation of the one‐child policy.     

Technical coefficients for bio-economic farm household models: a meta-modelling approach with applications for Southern Mali

In recent years, different types of bio-economic models have been developed to support the analysis of the potential impact of agrarian policies on changes in land use, sustainable resource management and farmers' welfare. Most bio-economic models rely on series of discrete input–output coefficients for current and improved cropping and livestock activities, whereas mathematical programming procedures are usually applied to analyse optimum allocative choice. Adequate procedures for the smooth integration of biophysical information into economic decision models are, however, not readily available. This article provides a new and comprehensive framework for the incorporation of technical input–output coefficients derived from agroecological simulation approaches into bio-economic farm household models. Therefore, continuous production functions are estimated for the production side of the farm household model, making use of meta-modelling principles. It is shown that meta-modelling offers considerable scope for improving the specification and behaviour of bio-economic farm household models. This procedure is applied in a farm household model developed for the analysis of farmers’ response to agrarian policies in Southern Mali. Results are presented for the behaviour of a typical household, focusing attention on the trade-offs between farm income and soil nutrient balances under free market conditions and with constraints on labour, capital and animal traction markets. The stability and robustness of the model is analysed through a simulation of the impact of higher input costs for land use and fertiliser applications.     

农户金融抑制及其福利损失的计量分析

本文运用biprobit模型和match模型,采用3000个农户的微观数据,计量分析了农户金融抑制的程度及其福利损失的大小。研究发现,农户金融抑制的程度为70.92%;由于金融抑制,所有样本农户平均所损失的纯收入、净经营收入、消费性支出和非土地性资产分别为9.43%、15.43%、15.57%和14.58%,直接受到金融抑制的样本农户平均所损失的纯收入、净经营收入、消费性支出和非土地性资产分别为9.55%、16.83%、16.46%和14.70%;土地面积、教育和医疗费用支出,对农户资金需求具有正的显著影响,金融资产余额对农户资金需求具有负的显著影响,生产性固定资产原值、受教育水平、交通条件和地理位置对农户资金需求的影响不显著;土地面积、受教育程度、地理位置和“关系”对资金供给具有正的显著影响,固定资产总值、交通条件对资金供给的影响不显著。     

Microfinance and gender empowerment

In this paper, we develop a theoretical model of household production, bargaining and credit to analyse how access to microcredit affects intra-household decision-making and welfare, and identify conditions under which female household members are most likely to benefit. We show that, consistent with ethnographic accounts of the impact of microcredit programmes on poor households, access to loans can lead to a variety of outcomes for intra-household decision-making and welfare depending on initial conditions and that, in some instances, women borrowers may experience a decline in welfare. We identify two instances in which a woman is most likely to benefit: when there is scope for investing the loan profitably in a joint activity, and when a large share of the household budget is devoted to household public goods.