Wealth Disparity, Social Capital and Rural Households’ Accessibility of Informal Credit
XU Lihe, YUAN Yan
School of International Business, Southwestern University of Economics and Finance Research Institute of Economics and Management, Southwestern University of Economics and Finance
Abstract:
Using 2011 and 2013 Chinese Household Finance Survey (CHFS)data, this paper empirically tests whether different wealth disparity makes difference in rural households’ access to informal credit markets. We find that for the rural households who have financial demands, the wealthier they are, the more likely for them to borrow from informal credit markts. It could be attributed to that the poor have no extra money to invest on social network, thus lowering their possibility of borrowing. We therefore conclude that informal credit market alone may not solve the financial constraints of poor rural households. The results are robust after we use instruments to account for the endogeneity and to multiple specifications.
Allen, F., J.Qian, and M. Qian. 2005. “Law, Finance, and Economic Growth in China” Journal of Financial Economics, 77 (1): 57~116.
Allen, F., J.Qian, and M. Qian. 2005. “Law, Finance, and Economic Growth in China” Journal of Financial Economics, 77 (1): 57~116.
[13]
Banerjee, A. 2005.The Two Poverties. Edited by Stefan Dercon, Insurance against Poverty, Oxford: Oxford University Press,
Banerjee, A. 2005.The Two Poverties. Edited by Stefan Dercon, Insurance against Poverty, Oxford: Oxford University Press,
[14]
Berhane, G. and C. Gardebroek. 2011. “Does Microfinance Reduce Rural Poverty? Evidence Based on Household Panel Data from Northern Ethiopia” American Journal of Agriculture Economics, 93(1):43~55.
Berhane, G. and C. Gardebroek. 2011. “Does Microfinance Reduce Rural Poverty? Evidence Based on Household Panel Data from Northern Ethiopia” American Journal of Agriculture Economics, 93(1):43~55.
[15]
Binswanger, Hans P. andShahidur R. Khandker. 1995. “The Impact of Formal Finance on the Rural Economy of India” Journal of Development Study, 32(2):234~262.
Binswanger, Hans P. andShahidur R. Khandker. 1995. “The Impact of Formal Finance on the Rural Economy of India” Journal of Development Study, 32(2):234~262.
[16]
Bowles, S., S. N. Durlauf, and K. Hoff. 2006. Poverty Traps. published by Russell Sage Foundation, New York, NY.
Bowles, S., S. N. Durlauf, and K. Hoff. 2006. Poverty Traps. published by Russell Sage Foundation, New York, NY.
[17]
Cassar, A., L. Crowley, and B. Wydick. 2007. “The Effect of Social Capital on Group Loan Repayment: Evidence from Field Experiments” The Economic Journal, 117 (517):F85~F106.
Cassar, A., L. Crowley, and B. Wydick. 2007. “The Effect of Social Capital on Group Loan Repayment: Evidence from Field Experiments” The Economic Journal, 117 (517):F85~F106.
[18]
Chen, X. and X. Zhang. 2012. “Costly Posturing: Relative Status, Ceremonies and Early Child Development in China” Working Paper, No.2012/70, UNU-WIDER.
Chen, X. and X. Zhang. 2012. “Costly Posturing: Relative Status, Ceremonies and Early Child Development in China” Working Paper, No.2012/70, UNU-WIDER.
[19]
Chen, Y. and Y. Ma.2013. The Development of Rural Finance in China. published by Enrich Professional Publishing (S) Private Limited, pp.15.
Chen, Y. and Y. Ma.2013. The Development of Rural Finance in China. published by Enrich Professional Publishing (S) Private Limited, pp.15.
[20]
Elston, Julie A., and David B. Audretsch. 2010.“Risk Attitudes, Wealth and Sources of Entrepreneurial Start-up Capital” Journal of Economic Behavior & Organization, 76(1):82~89.
Elston, Julie A., and David B. Audretsch. 2010.“Risk Attitudes, Wealth and Sources of Entrepreneurial Start-up Capital” Journal of Economic Behavior & Organization, 76(1):82~89.
[21]
Fafchamps, M. and F. Gubert. 2007. “The Formation of Risk Sharing Networks” Journal of Development Economics, 83(2):326~350.
Fafchamps, M. and F. Gubert. 2007. “The Formation of Risk Sharing Networks” Journal of Development Economics, 83(2):326~350.
[22]
Finlay, F., and L. M. Magnusson. 2009. “Implementing Weak Instrument Robust Tests for a General Class of Instrumental Variables Models”The Stata Journal, 9(3):1~26.
Finlay, F., and L. M. Magnusson. 2009. “Implementing Weak Instrument Robust Tests for a General Class of Instrumental Variables Models”The Stata Journal, 9(3):1~26.
[23]
Galor, O., and J. Zeira.1993. “Income Distribution and Macroeconomics” The Review of Economic Studies, 60(1): 35~52.
Galor, O., and J. Zeira.1993. “Income Distribution and Macroeconomics” The Review of Economic Studies, 60(1): 35~52.
[24]
Giuliano, P. and M. Ruiz-Arranz. 2009. “Remittances, Financial Development, and Growth” Journal of Development Economics, 90(1):144~152.
Giuliano, P. and M. Ruiz-Arranz. 2009. “Remittances, Financial Development, and Growth” Journal of Development Economics, 90(1):144~152.
[25]
Glewwe, P., and J. Van Der Gaag. 1990. “Identifying the Poor in Developing Countries: Do Different Definitions Matter?” World Development, 18(6):803~814.
Glewwe, P., and J. Van Der Gaag. 1990. “Identifying the Poor in Developing Countries: Do Different Definitions Matter?” World Development, 18(6):803~814.
[26]
Guirkinger, C. 2008, “Understanding the Coexistence of Formal and Informal Credit Markets in Piura, Peru” World Development, 36(8):1436~1452.
Guirkinger, C. 2008, “Understanding the Coexistence of Formal and Informal Credit Markets in Piura, Peru” World Development, 36(8):1436~1452.
[27]
Jalan, J., and M.Ravallion. 1999. “Are the Poor Less Well-Insured? Evidence on Vulnerability to Income Risk in Rural China”Journal of Development Economics, 58(1): 61~81.
Jalan, J., and M.Ravallion. 1999. “Are the Poor Less Well-Insured? Evidence on Vulnerability to Income Risk in Rural China”Journal of Development Economics, 58(1): 61~81.
[28]
Karlan, D., M. Mobius, T. Rosenblat, and A. Szeidl.2009. “Trust and Scoial Collateral” The Quarterly Journal of Economics, 124(3):1307~1361.
Karlan, D., M. Mobius, T. Rosenblat, and A. Szeidl.2009. “Trust and Scoial Collateral” The Quarterly Journal of Economics, 124(3):1307~1361.
[29]
Khandker,Shahidur R. 2005. “Microfinance and Poverty: Evidence Using Panel Data from Bangladesh” World Bank Economic Review, 19(2):263~286.
Khandker,Shahidur R. 2005. “Microfinance and Poverty: Evidence Using Panel Data from Bangladesh” World Bank Economic Review, 19(2):263~286.
[30]
Lee,Jeong-Joon, and Y. Sawada. 2010. “Precautionary Saving under Liquidity Constraints: Evidence from Rural Pakistan” Journal of Development Economics, 91(1): 77~86.
Lee,Jeong-Joon, and Y. Sawada. 2010. “Precautionary Saving under Liquidity Constraints: Evidence from Rural Pakistan” Journal of Development Economics, 91(1): 77~86.
[31]
Pitt, Mark M., andShahidur R. Khandker. 1998. “The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?’’ Journal of Political Economy, 106(5):958~996.
Pitt, Mark M., andShahidur R. Khandker. 1998. “The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?’’ Journal of Political Economy, 106(5):958~996.
[32]
Ray D. 1998.Development Economics, published by Princeton University Press, pp.533.
Ray D. 1998.Development Economics, published by Princeton University Press, pp.533.
[33]
Santos, P., and C.B. Barrett. 2011. “Persistent Poverty and Informal Credit” Journal of Development Economics, 96(2):337~347.
Santos, P., and C.B. Barrett. 2011. “Persistent Poverty and Informal Credit” Journal of Development Economics, 96(2):337~347.
[34]
Shoji, M., K. Aoyagi, R.Kasahara, Y. Sawada, and M. Ueyama. 2012. “Social Capital Formation and Credit Access: Evidence from Sri Lanka” World Development, 40(12):2522~2536.
Shoji, M., K. Aoyagi, R.Kasahara, Y. Sawada, and M. Ueyama. 2012. “Social Capital Formation and Credit Access: Evidence from Sri Lanka” World Development, 40(12):2522~2536.