The Influence Of Social Capital On Farm Household's Borrowing Behavior

The financing problem and expensive financing that has restricted the development of farmer household have always been an important problem to be solved in rural areas.The problem of imbalance between supply and demand of rural finance is the important phenomenon of rural finance bottleneck.The reason why it is imbalance is the risk caused by information asymmetry.China is a relationship-oriented country,if the whole resources can be mobilized fully to effectively connect information between formal financial institutions,private financial organizations and farmers,the risk caused by information asymmetry will be solved.The acceleration of the process of rural social structure change has made farmers' social mobility stronger.And this makes farmers' social capital differentiated and this is a characteristic feature in rural China at present.However the issue that differentiated social capital based on the changes of social structure influences farm household's borrowing behavior has been ignored.In the background of social structure changes,farmer's social capital differentiated,and the borrowing behavior of farm household's changes,the scientific problems extracted in this paper focus on the impact of different types of social capital on farmers' borrowing behaviors based on the background of China's rural social structure change.Two issues are mainly discussed: Firstly,under the background of the change of rural social structure,farmers' social capital is divided into two types: Embedding social capital and disembedding social capital.Secondly,the influence of different types of social capital on farmers' borrowing behavior is discussed.It combines organically economic rationality,social capital and social preference,and analyzes the influence mechanism of social capital on farmers' borrowing behavior.This research deepens the research on social capital theory and farmers' borrowing behavior,and has important practical significance for the development of rural economy and the improvement of farmers' income,especially for solving the bottleneck of rural finance.The total objective of this paper is to explore the changes of farm households' borrowing behavior under the background of social structure changes and analyse the influencing mechanism of social capital on farm household's borrowing behavior.Around this goal,first of all,analyzing China's rural social structure changes from the four essential factors of land,labor,capital and technology,and analyzing that the structural change causes farmers trust network scope,social norms and rules change,lastly which makes the differentiation of peasant household social capital.Embedding social capital transformed into disembedding social capital.The former social capital is based on consanguinity and affinity and has the characteristic of closure and homogeneity.The latter is based on edge relations and has the characteristic of openness,heterogeneity,and high quality.The basic rule of lender(institution)whether to lend is to judge the repayment ability and willingness of farmers.The signaling of social capital can transmit farm household's risk type.It means that the farm household with low level of social capital is with high risk,vice versa,the farm household with high level of social capital is with low risk.Farm household's disembedding social capital is higher,the repayment ability is higher,and the default risk is lower.We can judge the farm household's repayment willingness.Farm household's disembedding social capital is higher,default cost is higher,and repayment willingness is stronger.Starting with altruistic thought,farm household's embedding social capital is higher,altruistic thought is stronger,and the probability of farm household partispating in informal risk sharing arrangements(IRSA)is higher,vice versa embedding social capital is lower,the probability of farm household participating in informal risk sharing arrangements(IRSA)is lower.By self-interest,and from repeated game model of farm household,we can get that farm household's embedding social capital is higher,the probability of farm household participating in informal risk sharing arrangement(IRSA)is higher and the quantity of informal risk sharing arrangement participated in is bigger.By the Chinese household financial survey data,from the three factors of social capital—network area,social rule and trust mechanism,we testfy the basic hypothesis.Firstly it divides the farmers into groups: The farmer with credit and the farmer without credit,the farm with formal loans and the farmer with informal loans,and then it compares the mean differences of variables between groups.Secondly it gets the effect of disembedding social capital and embedding social capital on farm household's borrowing behavior by Probit model and gets the mean marginal effects.Considering that there may be endogenous problems caused by reverse causality between social capital and farmer's borrowing behavior and omission of variables,we do regression estimation by IV-Probit,lastly we do robustness test for the effect of social capital on farm household's formal borrowing and informal borrowing by small sample.Next it tests the effect of social capital on farm household's borrowing amount.Firsrly it estimates the effect by OLS estimation,since the estimated sample is only the sample whose borrowing amount is greater than or equal to 0.The sample is not random,which must cause sample selection bias problem,therefor Heckman model is choosen for analyzing the effect of social capital on farm household's borrowing amount.Tobit model is also applicable to dependent variable constrained problem,which is used for estimating the effect of social capital on farm household's borrowing amount.Lastly small sample is also used for doing robustness check.The conclusion of this paper has the following enlightenment to alleviate the financing problems of farm household.Firstly,paying attention to the role of social capital in peasant households' borrowing behavior.This paper has tested that social capital has a significant impact on farmers' borrowing behavior.Complying with the differentiation rule of farm households' social capital and give full play to the role of social capital in rural households' borrowing behavior.Secondly,the informal borrowing behavior takes up a large share of the rural financial market.Embedding social capital can improve the availability of informal borrowing,improve the implementation efficiency of financial behavior.It can reduce the bottleneck of rural finance to make full use of this mechanism.And then,formal borrowing behavior will be the development trend of rural financial market.Applying the action mechanism of embedding social capital and disembedding social capital to rural formal financial market and designing more financial products in line with the characteristics of rural households' social capital can improve the allocation efficiency of rural financial resources.