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Article
Publication date: 29 June 2021

Guohua Yu and Zheng Lu

The purpose of this study is to elaborate the theoretical mechanism of rural credit input affecting the urban–rural income gap from the perspective of labor transfer, and use a…

Abstract

Purpose

The purpose of this study is to elaborate the theoretical mechanism of rural credit input affecting the urban–rural income gap from the perspective of labor transfer, and use a dynamic panel mediation model to test the transmission mechanism of rural credit input affecting the urban–rural income gap through labor transfer, so as to provide an empirical basis for narrowing the urban–rural income gap in China.

Design/methodology/approach

This paper constructs a mechanism analysis framework for rural credit input affecting the urban–rural income gap. From the perspective of resource allocation and labor transfer, the authors expound the transmission path of rural credit input to the urban–rural income gap and analyze the theoretical mechanism of rural credit input that affects the urban–rural income gap through labor transfer. Based on this, this paper uses the dynamic panel mediation model to test the effect relationship between rural credit input, labor transfer and urban–rural income gap in 31 provinces of China from 2009 to 2018.

Findings

In theory, increasing rural credit input can ease the financial constraints on the development of “agriculture, rural areas and farmers” and provide capital accumulation for the development of rural non-agricultural industries. The development of rural non-agricultural industries can provide more jobs for rural surplus labor, thereby increasing the labor rate of return in rural areas, and ultimately conducive to narrowing the urban–rural income gap. Further, increasing rural credit input can improve the development level of rural non-agricultural industries, thereby promoting the transfer of agricultural labor. At the same time, rural credit input based on the intermediary variable of labor transfer has a significant inhibitory effect on the urban–rural income gap.

Research limitations/implications

This study mainly focuses on the relationship between rural credit input, labor transfer and urban–rural income gap, so it is impossible to use micro-level data to further verify the impact of rural credit input on labor transfer. At the same time, the collection of indicators of rural credit investment in the China Financial Yearbook only started in 2009, which limited the number of samples to a certain extent.

Practical implications

This paper assumes that the economy is mainly composed of urban and rural economic sectors. Therefore, labor can flow freely between urban and rural areas. However, in the near future, China's rural secondary and tertiary industries may develop rapidly, especially with the in-depth implementation of rural revitalization strategy, it is very important to pay attention to the current situation of rural industrial structure and incorporate the factors such as rural industrial structure into the existing model.

Social implications

This study attempts to provide a new perspective and inspiration for rural credit input, the optimal allocation of labor force and narrowing the urban–rural income gap under China's rural revitalization strategy.

Originality/value

Based on the analysis framework of neoclassical economic theory, this paper uses the constant elasticity of substitution production function to establish an urban–rural two-sector nested model that includes credit supply variables and analyzes the mechanism of rural credit input affecting the urban–rural income gap through labor transfer.

Details

China Agricultural Economic Review, vol. 13 no. 4
Type: Research Article
ISSN: 1756-137X

Keywords

Abstract

Details

The Impacts of Monetary Policy in the 21st Century: Perspectives from Emerging Economies
Type: Book
ISBN: 978-1-78973-319-8

Book part
Publication date: 3 December 2014

Débora Franco Lerrer and Leonilde Servolo de Medeiros

Major pillar of Via Campesina in Brazil, the Landless Workers’ Movement (Movimento dos Trabalhadores Rurais Sem Terra – MST) political platform combines land reform and…

Abstract

Major pillar of Via Campesina in Brazil, the Landless Workers’ Movement (Movimento dos Trabalhadores Rurais Sem Terra – MST) political platform combines land reform and agro-ecology, claiming for a profound change in the hegemonic agriculture model in the country, hoisting the ‘food sovereignty’ flag. However, this was not a linear trajectory. Focusing on events that took place in the state of Rio Grande do Sul, the birthplace of the MST, this chapter aims to analyse the different path followed by MST there in order to consolidate the ‘conquered’ settlements. The organization approached, initially, a network of technicians and social organizations critics of the technological package of the Green Revolution in Brazil. Afterwards, choose to support the deployment of conventional agriculture in the agrarian reform settlements, prioritizing collective organization of labour through cooperatives of production, practicing an agriculture based in the intensive use of pesticides, chemical fertilizers and commercial seed varieties. Thanks to the growing international connections of the MST, that paved the way for the creation of Via Campesina, and to the proximity to ‘militant technicians’ coming mainly from the agronomy student movement, in the end of the 1990s, MST resumed its dialogue with alternative agriculture strands, particularly with agro-ecology, campaigning for an agriculture based on principles of environmental conservation and valorization of the peasant way of life.

Details

Alternative Agrifood Movements: Patterns of Convergence and Divergence
Type: Book
ISBN: 978-1-78441-089-6

Article
Publication date: 2 November 2012

Fengxia Dong, Jing Lu and Allen M. Featherstone

The purpose of this paper is to examine the effect of credit constraints on agricultural productivity in China.

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Abstract

Purpose

The purpose of this paper is to examine the effect of credit constraints on agricultural productivity in China.

Design/methodology/approach

Using data from a rural financial survey, a switching regression model is used to account for endogeneity and heterogeneity. Carter presents three ways that credit might affect the production functions; a shift along a given production surface by allowing an optimal level of inputs, a shift the production surface out by allowing the purchase of more efficient inputs, and the third is to increase net revenue by more intensive use of fixed inputs and resources. Thus, the effects of factors on agricultural productivity may not be independent of credit status; therefore, separate functions for credit‐constrained and non‐constrained households are examined.

Findings

Empirical estimates of the impacts of credit constraints on agricultural productivity are provided for the Heilongjiang province, a major agricultural production area, in Northeast China. By removing credit constraints, average agricultural productivity was estimated to be increased by 75 percent. Under credit constraints, labor inputs, along with a farmers' education, cannot be fully employed because of an inappropriate mix of inputs.

Research limitations/implications

Young farmers may not be able to leverage their comparative advantage for physically intensive farm work under credit constraints. Because of data limitations, the research does not include information on informal credit in the estimation, which may underestimate the effects of credit constraints.

Originality/value

This study provides an analysis of the impacts of credit constraints on rural household productivity for the Heilongjiang province, a major agricultural production region, in Northeast China.

Details

Agricultural Finance Review, vol. 72 no. 3
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 28 October 2014

Jianmei Zhao and Peter J. Barry

– The purpose of this paper is to evaluate the effects of access to formal credit on rural household technical efficiency in China.

Abstract

Purpose

The purpose of this paper is to evaluate the effects of access to formal credit on rural household technical efficiency in China.

Design/methodology/approach

Based on the rural household survey data in Weifang city, Shandong province in northern China, the authors apply recent developed bootstrapped DEA approach to investigate rural technical efficiency at the household level under the consideration of off-farm activities. Rural households are then identified as credit constrained and classified as supply-side and demand-side credit constraints by applying direct elicitation method. Finally, the authors apply a tobit regression to examine the effects of credit constraints on household technical efficiency.

Findings

Rural households in China not only suffer supply-side credit constraints, but also demand-side credit constraints resulted from the transaction costs and risk rationing. The tobit regression discloses that demand-side credit constraints impose significant negative impacts on household technical efficiency.

Originality/value

The authors clarify the definition of credit constraints and classify the credit constraints into supply-side and demand-side credit constraints. The results of this paper have significant policy implications for rural finance policies in China.

Details

China Agricultural Economic Review, vol. 6 no. 4
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 26 August 2014

Million Tadesse

– The purpose of this paper is to investigate the impact of access to credit and safety nets on fertilizer adoption in rural Ethiopia.

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Abstract

Purpose

The purpose of this paper is to investigate the impact of access to credit and safety nets on fertilizer adoption in rural Ethiopia.

Design/methodology/approach

A panel data set collected in 2005 and 2007 on 278 households and over 5,700 plots from the Southern Highlands of Ethiopia is examined. The authors developed a theoretical model relating input use and credit contract under third-party credit collateral agreement. The estimation is based on instrumental variables regressions to account for the endogeneity of credit access, and safety nets in fertilizer demand equation.

Findings

Despite increasing trends in fertilizer and improved varieties adoption since mid-2003, only 22 percent of the plots in the sample is actually received fertilizer. Households with more assets measured by livestock wealth are more likely to adopt fertilizer but less likely to participate in the local credit market as they have better savings that could be used to buy fertilizer/improved seeds without credit contract. This suggests poorer farmers heavily depend on credit than wealthier. Participation in safety nets programs did not contribute for increased use of fertilizer suggesting that the program either competes with agricultural labor or the low wage income was not enough to pay for farm inputs.

Practical implications

The findings show that with a heavier reliance on credit by poorer farmers it appears that much might be gained by targeting policies toward increasing credit access to this group.

Originality/value

Studies that utilize repeated plot- and household-level observations are limited. To the knowledge, this is the first study showing the relationship between credit accesses, public work program and fertilizer adoption over time in rural Ethiopia.

Details

Agricultural Finance Review, vol. 74 no. 3
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 1 January 1975

WAYNE R. THIRSK

Recently the World Bank, aid donors, and others have shown greater interest in improving the income prospects of small farmers in LDC's. This interest springs in part from the…

101

Abstract

Recently the World Bank, aid donors, and others have shown greater interest in improving the income prospects of small farmers in LDC's. This interest springs in part from the fact that small farmers are at the bottom of the income ladder in many poor countries (though landless rural workers may be even worse off). Proposals to raise small farmer incomes have run the gamut from “wide‐spread” land reform to urban migration. Credit reallocation towards small and away from large farms has also been consistently advocated and has received renewed impetus due to the perceived failure of other alternative measures. Effective land reform has been found difficult to achieve short of full scale political revolution while enthusiasm for nonagricultural solutions has been tempered, at least until recently, by disappointing growth of high income employment opportunities in urban sectors.

Details

Journal of Economic Studies, vol. 2 no. 1
Type: Research Article
ISSN: 0144-3585

Article
Publication date: 11 September 2023

Camillus Abawiera Wongnaa, Alhassan Abudu, Awal Abdul-Rahaman, Ernest Amegawovor Akey and Stephen Prah

This study examined the impact of the Input Credit Scheme (ICS) by the Integrated Water Management and Agriculture Development (IWAD) on the productivity and food security of…

Abstract

Purpose

This study examined the impact of the Input Credit Scheme (ICS) by the Integrated Water Management and Agriculture Development (IWAD) on the productivity and food security of smallholder rice farmers in Ghana.

Design/methodology/approach

Cross-sectional data from 250 rice farming households in the Mamprugu Moagduri district of the North East Region obtained from a multi-stage sampling technique were used for the study. Inverse Probability Weighted Regression Adjustment (IPWRA), Propensity Score Matching (PSM) and Kendall's coefficient of concordance were the methods of analysis employed.

Findings

Empirical results show that education, rice farming experience, dependency ratio, FBO membership, farm size and farm age were the significant factors influencing participation in the input credit scheme (ICS). Also, participants had an average rice productivity of 1,476.83 kg/ha, whereas non-participants had 1,131.81 kg/ha implying that participants increased their productivity by about 30%. In addition, the study revealed that participant households increased their household dietary diversity (HDDS) by 0.45 points amounting to about 8% diversity in their diets. High-interest rates associated with credit received, the short periods of credit repayment and the high cost of inputs provided under the scheme were the most challenging constraints associated with partaking in the ICS.

Practical implications

The available literature on agricultural interventions have predominantly emphasized input credit as a key factor for improving cropt productivity and food security of smallholders. This study provides compelling evidence that participation in ICSs can result in substantial benefits for agricultural development, as evidenced by increased productivity leading to improved food security. The significance of these findings is highlighted by the fact that, through participation in input credit schemes, smallholder rice farmers in many developing countries see substantial improvement in their capacity to access productive resources, thereby improving their productivity, while simultaneously reducing food insecurity.

Social implications

Leveraging on the improved productivity of participants in the ICS, this study advocates that such input credit schemes should scale up to more food-insecure farming communities in Ghana.

Originality/value

The study uses a doubly robust econometric approach to evaluate the impact of ICS on smallholder rice farmers' productivity and food security in Ghana, making it the first of its kind. The findings offer a solid basis for future research and provide guidance for policymakers looking to boost agricultural development in Ghana.

Details

Agricultural Finance Review, vol. 83 no. 4/5
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 18 October 2019

Martinson Ankrah Twumasi, Yuansheng Jiang and Monica Owusu Acheampong

The purpose of this paper is to determine the factors influencing rural youth farmers’ credit constraints status and the effect of credit constraint on the intensity of…

Abstract

Purpose

The purpose of this paper is to determine the factors influencing rural youth farmers’ credit constraints status and the effect of credit constraint on the intensity of participation of these farmers in Ghana.

Design/methodology/approach

The econometric estimation is based on cross-sectional data collected in 2018 from the Brong Ahafo region in Ghana. The sample data set consists of 450 rural youth farmers. The collected data were analyzed through different econometric techniques, using the endogenous switching regression model (ERSM).

Findings

The direct elicitation approach employed in this study revealed that out of the 450 farmers, 211 (47 percent) of the respondents were credit constrained compared to 239 (53 percent) of their counterparts who were unconstrained. The ERSM indicated that youth farmers education, age, savings, parents occupation reduced the probability of the rural youth farmer to be credit constrained but cumbersome loan application procedure and loan disbursement time positively affect credit constraint. Moreover, farmers that are credit constrained have lower intensity of participation in agriculture activities than a random farmer from the sample. This suggests that access to credit has a positive impact on the intensity of participation in agriculture activities.

Research limitations/implications

In this study, only rural youth farmers in a particular region were considered. However, there are youths all over the nation. Therefore, future researchers could consider other youth’s farmers elsewhere in the country.

Originality/value

Although existing studies have examined rural youth farmers’ participation in agriculture and credit constraint separately, the unique contribution of this paper is the analysis of credit constraint of rural youth farmers as well as the impact of credit constraint on the intensity of participation in agriculture activities.

Details

Agricultural Finance Review, vol. 80 no. 1
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 20 September 2019

Joseph Ikechukwu Uduji, Elda Nduka Okolo-Obasi and Simplice Anutecia Asongu

The purpose of this paper is to critically examine the impact of a growth enhancement support scheme (GESS) on the enabling environment of smallholder farmers in sub-Saharan…

Abstract

Purpose

The purpose of this paper is to critically examine the impact of a growth enhancement support scheme (GESS) on the enabling environment of smallholder farmers in sub-Saharan Africa. The main aim is to investigate the impact of the GESS on access to rural farm credit and the transport cost of smallholder farmers in the agricultural transformation agenda (ATA) in Nigeria.

Design/methodology/approach

This paper adopts a survey research technique, aimed at gathering information from a representative sample of the population, as it is essentially cross-sectional, describing and interpreting the current situation. A total of 1,200 were sampled across the six geopolitical zones of Nigeria.

Findings

The results from the use of a double-hurdle model indicate that the GESS has a significant impact on farmers’ access to credit, but does not significantly impact on rural farm transport cost, which subsequently influences the price of food in the country.

Practical implications

This implies that if the Federal Government of Nigeria is to work toward an ideal agricultural transformation agenda, transport networks should be closely aligned with the GESS priorities to provide connectivity to rural areas that provide most of the country’s agricultural output.

Originality/value

This research adds to the literature on the agricultural and rural development debate in developing countries. It concludes that embracing a rural finance and transportation infrastructure should form the foundation of the ATA in Nigeria, which, in turn, would provide a conducive environment for a more widespread rural economy in sub-Saharan Africa.

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