Public pension and borrowing behavior: evidence from rural China
China Finance Review International
ISSN: 2044-1398
Article publication date: 26 January 2021
Issue publication date: 6 February 2023
Abstract
Purpose
The purpose of this paper is to investigate how China's rural public pension affects farmers' formal borrowing, which has always been rationed.
Design/methodology/approach
This paper uses a difference-in-difference (DID) estimation to evaluate the effect of the implementation of the New Rural Pension Scheme (NRPS) at the end of 2009 on farmers' formal borrowing.
Findings
The results show that the NRPS significantly reduces farmers' formal borrowing from rural credit cooperatives (RCCs). The effect is significant among the elderly, eastern China and high-income groups.
Originality/value
This study contributes to the literature by identifying another potential reason for rural formal credit shortage. Policymakers and rural formal financial institutions should consider the demand side problem of lending.
Keywords
Acknowledgements
The authors would like to thank Chaofei He and the anonymous reviewers for their constructive comments and acknowledge the support of grants from the National Natural Science Foundation of China (project code 71833003, 71973094, 71773076, and 71673186).
Citation
Fang, C. and Shi, Q. (2023), "Public pension and borrowing behavior: evidence from rural China", China Finance Review International, Vol. 13 No. 1, pp. 63-78. https://doi.org/10.1108/CFRI-07-2020-0103
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited