The link between credit markets and self-employment choice among households in rural China |
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| Affiliation: | 1. Ministry of Finance, China;2. Tsinghua University, National Institute for Fiscal Studies, China;3. Reed College, United States;1. School of Economics and Finance, Curtin Business School, Australia;2. School of Business & Law, Edith Cowan University, Australia;1. École des Hautes Etudes en Santé Publique (EHESP) School of Public Health, Sorbonne Paris Cité, Paris, France;2. Department of International Health, School of Public Health and Primary Care (CAPHRI), Faculty of Health, Medicine and Life Sciences, Maastricht University, Maastricht, Netherlands;3. Centre Virchow Villermé, Sorbonne Paris Cité, Paris, France;4. Institute of Global Health, University of Geneva, Geneva, Switzerland;5. Harvard School of Public Health, Harvard University, Boston, MA, USA;6. Departments of Social and Environmental Health Research and of Population Health, London School of Hygiene & Tropical Medicine, London UK;1. Department of Neurology, Stroke Clinical Research Unit, West China Hospital, Sichuan University, Chengdu, P.R. China;2. Department of Neurology, People''s Hospital of Garzê, Garzê, P.R. China;1. Unité de physique des dispositifs à semi-conducteurs, Tunis EL MANAR University, 2092 Tunis, Tunisia;2. Department of Agriculture, Forest, Nature and Energy (DAFNE), University of Tuscia, Via S. Camillo de Lellis snc, 01100 Viterbo, Italy;1. University of Adelaide, Australia;2. The Johns Hopkins University Bologna Center, Italy |
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| Abstract: | Our paper examines how credit markets operate through wealth to influence households’ entrepreneurial choices. Our results show that policy-led bank branch withdrawal in rural China has a significant negative impact on credit availability to rural households, though unexpectedly the effect is felt more strongly in informal than formal credit markets. Furthermore, we observe that self-employment is impeded by reductions in wealth associated with credit contraction. Policies which provide more and better formal financial services to rural households are predicted to increase the flow of credit, through both formal and informal channels, thereby supporting accumulation, diversification, and economic growth. |
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| Keywords: | Rural credit markets Self-employment Asia China |
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