|
|
|
| Have Public Finance Policies Induced Financial Institutions to Support Agricultural Development？ An Evaluation of the Effects of the Reward Policy On Incremental Agricultural Loans in China |
| XING Weibo, ZHANG Simin
|
| School of International Trade and Economics, University of International Business and Economics |
|
|
|
Abstract Every year, the issue of “agriculture, countryside, and farmers” is noted as a priority in the Chinese Central Government's Policy Document No. 1. Agriculture in China is currently in a critical transition period. The mode of agricultural production is shifting from labor-intensive to a mode that is both capital-and technology-intensive, which means that funds must be efficiently invested to promote agricultural development. However, there has been a widespread lack of funding in rural areas, and asymmetrical access to information and the failure of rural financial markets are also serious problems. Agricultural loans, including agricultural credits, are the main policy tools for poverty alleviation in rural areas.
Over the years, the central government has promulgated a large number of fiscal and financial policies to support rural loans and the agricultural economy. Recently, a series of government decisions indicate that China is trying to use fiscal policies to guide the allocation of financial resources to rural areas. To encourage financial institutions to increase agricultural loans, the Ministry of Finance has since 2009 overseen a pilot reward policy for institutions making incremental agricultural loans. It is an important measure to integrate fiscal policy and financial policy.
Drawing on theories of rural finance and agricultural economic growth, this study assesses the impacts of the Reward Policy for Incremental Agricultural Loans on agricultural economic development in China. In addition, this study explores the mechanism through which the policy affects agricultural economic development. As 25 provinces successively entered the reward policy pilot program over the 2009 to 2014 period, this study establishes a time-varying difference-in-differences model to evaluate the effect of this exogenous incentive policy on the development of the local agricultural economy. The model uses relevant agricultural economic data from 31 provinces from the 2006 to 2018 period as the research sample. First, we construct an empirical model that uses grain output and farmers' income as the explanatory variables, and policy interaction terms as the core explanatory variables. Then we add control variables such as climatic conditions, input factors, fiscal expenditure on agriculture, local financial development, and agricultural industrialization. Second, to ensure the reliability of the empirical results, we conduct a robustness test. Third, to assess whether the incentive policy has heterogeneous impacts across provinces, we add the interaction terms of geographic location and policy variables to the model and then conduct a heterogeneity test. Finally, we identify the channels through which the incentive policy affects the agricultural economy by examining the impacts of the policy on the agricultural loan balance, power of agricultural machinery, fixed assets investment of rural households, transportation, and water conservation infrastructure construction. The data are from the China Statistical Yearbooks, Wind database, and CSMAR database.
The empirical results show that the Reward Policy for Incremental Agricultural Loans has significantly promoted the growth of grain output and farmers' income. This conclusion remains valid in the robustness tests. Furthermore, the impacts of the policy on the agricultural economy of provinces in different geographical locations is obviously heterogeneous, i.e., the central and western provinces have been more affected. This may be due to the lower proportion of primary industry and relatively mature financial market in the eastern region. Finally, the analyses of the mechanisms show that the policy mainly promotes local agricultural economies by promoting local agricultural loans, which in turn improve the level of agricultural mechanization and optimize rural infrastructure in areas such as transportation and water conservation.
Based on the empirical evidence, we put forward the following policy recommendations. At present, we should continue to encourage financial institutions to support agriculture. The coordination and cooperation of fiscal policies and monetary policy tools achieves a win-win situation for financial institutions and farmers. Differentiated fiscal policies (including targeted fee subsidies and tax incentives for loans) could also be used to encourage financial institutions to focus on the countryside and increase agricultural investment.
|
|
Received: 03 November 2020
Published: 02 June 2021
|
|
|
|
|
| Cite this article: |
|
XING Weibo,ZHANG Simin. Have Public Finance Policies Induced Financial Institutions to Support Agricultural Development？ An Evaluation of the Effects of the Reward Policy On Incremental Agricultural Loans in China[J]. Journal of Financial Research,
2021, 491(5): 1-19.
|
|
|
|
| URL: |
| http://www.jryj.org.cn/EN/ OR http://www.jryj.org.cn/EN/Y2021/V491/I5/1 |
| [1] |
曹协和,2008,《农业经济增长与农村金融发展关系分析》,《农业经济问题》第11期,第50～55页。
|
| [2] |
何志雄和曲如晓,2015,《农业政策性金融供给与农村金融抑制—来自147个县的经验证据》,《金融研究》第2期,第148～159页。
|
| [3] |
侯麟科、仇焕广和汪阳洁,2015,《气候变化对我国农业生产的影响—基于多投入多产出生产函数的分析》,《农业技术经济》第3期, 第4～14页。
|
| [4] |
黄寿峰,2016,《财政支农、金融支农促进了农民增收吗？》,《财政研究》第8期,第78～90页。
|
| [5] |
孙同全和潘忠,2019,《新中国农村金融研究70年》,《中国农村观察》第6期,第2～18页。
|
| [6] |
汪昌云、钟腾和郑华懋,2014,《金融市场化提高了农户信贷获得吗—基于农户调查的实证研究》,《经济研究》第10期,第33～45页。
|
| [7] |
谢平和徐忠,2006,《公共财政、金融支农与农村金融改革——基于贵州省及其样本县的调查分析》,《经济研究》第4期,第106～114页。
|
| [8] |
杨栋和郭玉清,2007,《中国农业贷款效率—基于双方程误差修正模型》,《金融研究》第9期,第151～159页。
|
| [9] |
余新平、熊皛白和熊德平,2010,《中国农村金融发展与农民收入增长》,《中国农村经济》第6期,第77～86页。
|
| [10] |
周振、伍振军和孔祥智,2015,《中国农村资金净流出的机理、规模与趋势:1978-2012年》,《管理世界》第1期,第63～74页。
|
| [11] |
Dell, M., B. Jones and B. Olken, 2012, “Temperature shocks and Economic Growth: Evidnce from the Last Half Century”, American Economic Journal: Macroeconomics 4(3), pp. 66～95.
|
| [12] |
Hartarska, V., D. Nadolnyak and X. Shen, 2015, “Agricultural Credit and Economic Growth in Rural Areas”, Agricultural Finance Review, 75(3), pp302～312.
|
| [13] |
Khandker, S. and R. Faruqee, 2003, “The Impact of Farm Credit in Pakistan”, Agricultural Economics, 28(3), pp.197～213.
|
| [14] |
Kaboski, J. and R. Townsend, 2012, “The Impact of Credit on Village Economies”, American Economic Journal: Applied Economics, 4(2), pp. 98～133.
|
| [15] |
Mata, D. and G. Resende, 2020, “Changing the Climate for Banking: The Economic Effects of Credit in a Climate-vulnerable Area”, Journal of Development Economics 146, 102459, pp. 1～17.
|
|
|
|
