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Does digital inclusive finance promote agricultural production for rural households in China? Research based on the Chinese family database (CFD)

Yang Liu (School of Economics, Shandong University, Jinan, China)
Chunyu Liu (Columbia University, New York, New York, USA)
Mi Zhou (Nankai University, Tianjin, China)

China Agricultural Economic Review

ISSN: 1756-137X

Article publication date: 14 January 2021

Issue publication date: 1 June 2021

907

Abstract

Purpose

The development of digital inclusive finance appears to be able to solve the difficulty of traditional finance, which cannot completely cover agriculture and farmers and provides better financial services and products to Chinese farmers. Thus, it improves the farmers' enthusiasm for agricultural production. The purpose of this paper is to clarify whether this goal is indeed being achieved.

Design/methodology/approach

This paper theoretically analyzes the mechanism that influences the effect of digital inclusive finance on rural households' agricultural production decisions and conducts an empirical study based on a sample from the Chinese family database (CFD).

Findings

First, the development of digital financial inclusion in general can encourage rural households to reduce agricultural production. Second, the negative effect of digital inclusive finance on households' agricultural output is realized by widening the gap between the efficiency of non-agricultural economic activities and the efficiency of agricultural production. The wider the gap is, the lower the enthusiasm of households for agricultural production. Third, the mediating effect of “digital financial inclusion – difference in efficiency – agricultural output” has a significant negative effect on households with low agricultural production efficiency, but not households with high agricultural production efficiency. Digital inclusive finance has no significant effect on the difference in efficiency between the two economic activities of high-efficiency households, but a greater difference in efficiency between the two economic activities corresponds to higher enthusiasm of households for agricultural production.

Originality/value

To the best of our knowledge, this paper is the first to analyze the impact of digital financial inclusion on Chinese farmers' agricultural production. The findings of this study can provide policy-related insights to help local governments promote the development of digital finance in China's agricultural economy.

Keywords

Acknowledgements

The authors thank the China family database platform of Zhejiang University, Peking University Institute of Digital Finance and Guo Feng from the School of Public Economics and Management at Shanghai University of Finance and Economics for data sharing and guidance in the data use methods in this research.Declarations: This paper is the authors' original paper, which has never been published in any form. The authors declare that they have no competing interests.Availability of data and material: The main data used to support the findings of this study are derived from the “Chinese Family Database” (CFD) of Zhejiang University and the “China Household Finance Survey” (CHFS) of the Survey and Research Center for China Household Finance of Southwestern University of Finance and Economics. The digital financial inclusion index adopts the “Digital Inclusive Financial Index”, which was published by the Peking University Institute of Digital Finance.The metrology software used is Stata 13. The do-files can be supplied, readers can repeat the research on the VPN platform at “Chinese Family Database” (CFD) of Zhejiang University.Funding: The 67th batch of China Postdoctoral Foundation Project, titled “The Influence Mechanism of Digitization on Agricultural Production Decision Making of Agricultural Families”, project No.: 2020M672031.The basic scientific research funding project of central universities of China, titled “Research on the impact of internet and digital economy on Regional Economy and Countermeasures”, project No.: 63192602.

Citation

Liu, Y., Liu, C. and Zhou, M. (2021), "Does digital inclusive finance promote agricultural production for rural households in China? Research based on the Chinese family database (CFD)", China Agricultural Economic Review, Vol. 13 No. 2, pp. 475-494. https://doi.org/10.1108/CAER-06-2020-0141

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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