Research On The Effect Of Social Interaction On The Financial Behavior Of Peasant Households

At a time when the COVID-19 pandemic is still spreading,the global economic recovery is slow,and the challenge of climate change is acute,China has maintained economic growth in such a complex financial situation and accomplished the historic task of poverty alleviation.The economic development of our country has made achievements that attract worldwide attention.However,various tasks’ economic and social development are still heavily arduous;urban and rural economic development is unbalanced in our economic health,sustainable development of hidden trouble.Vigorously developing rural economy and sustaining rural revitalization is the mainstay and solid guarantee of our healthy and sustainable economic development,and also the solution to the symptoms and root causes of rural ageing,low birth rate,widening income gap and "small-scale" dilemma.The financial factor is essential for consolidating the achievements in poverty alleviation,promoting rural revitalization and supporting the economic development of agriculture,rural areas and farmers.In recent years,the rapid growth of our country’s rural finance has injected capital vitality into the rural economy.However,a good financial system is bound to match supply and demand.Suppose we blindly expand financial supply while ignoring rural areas’ and farmers’ economic demand characteristics.In that case,it will not only lead to the waste of resources and increase financial risks but also erode the welfare of farmers.Therefore,whether the gradually expanded rural financial supply can simultaneously support rural economic development,increase household income and improve welfare is worthy of further investigation.To answer the above questions,we must pay attention to the demand side of rural finance but also explore the characteristics of farmers’ financial decision-making.The residents in rural areas have a lack of financial experience,insufficient economic information and low financial literacy.As a result,they cannot effectively and reasonably use the existing financial resources.It results in "insufficient financial participation","excessive debt","by financial fraud","difficult loan and difficult loan coexist",and other adverse financial phenomena in rural areas.It not only goes against the original intention of vigorously developing rural finance but also goes against the overall healthy development of the rural finance system.Based on farmers’ limited rationality characteristics,this paper studies farmers’ financial decision-making and behaviour.According to cognitive psychology and dual-system decision-making theory,farmers alternately make decisions through the sound system and the empirical system.They are more inclined to analyze and judge by the practical approach when facing a lack of information and a mismatch between knowledge and analytical ability.Farmers have bounded not only rationality but also have the dual psychology of "cognitive tightwad" and the need for closed-loop cognition,and also attach importance to the social utility of financial decisions.Social interaction plays a vital role in both the rational system and the empirical system decision-making of farmers so that it will affect the financial behaviour of farmers.Social interaction is a process in which group members consciously learn,imitate or unconsciously receive information and perceive emotions through language communication,behavioural observation and emotional infection.It is interdependence and influence between individuals.In farmers’ financial decision-making,social interaction has the compensation function of information and knowledge and influences farmers’ financial behaviour through social learning,group reference,social comparison and other channels.Based on the critical role of social interaction in farmers’ financial decision-making,this paper studies the impact of social interaction on farmers’ economic behaviour from the perspective of bounded rationality.My paper does not stop at the qualitative research on whether social interaction affects farmers’ financial behaviour but explores how social interaction affects farmers’ financial behaviour and which mechanisms can weaken or strengthen the impact of social interaction on farmers’ financial behaviour.In addition,it also pays attention to which types of farmers’ financial behaviours are easily affected by social interaction and which groups’ social interaction can more affect farmers’ financial behaviours.The main research contents and conclusions of this paper are as follows:(1)This paper studies the influence of social interaction on farmers’ financial participation,trying to provide enlightenment for optimizing the utilization of financial resources in rural areas.The study found that social interaction significantly promoted the breadth and depth of farmers’ financial participation and made the financial participation of farmers in the same village show the same group effect.After subdividing social interaction groups,it is found that social interaction with different groups impacts farmers’ financial participation.Through heterogeneity analysis,it is found that the financial participation of female farmers,young farmers and farmers with low years of education are more likely to be affected by social interaction.In addition,it is found that the spillover of financial knowledge and social comparison are the mechanisms by which social interaction affects the financial participation of farmers.And the government’s trust in farmers and the income gap between farmers are the regulating mechanisms by which social interaction affects the financial involvement of farmers.In addition,it is also found that social interaction significantly promotes farmers’ use of digital financial inclusion products.(2)This paper studies the impact of social interaction on farmers’ risk-taking,aiming to provide a reference for rural financial institutions and regulatory agencies to prevent rural systemic risk.The study found that social interaction significantly increased farmers’ risk-taking and made farmers in the same village show the same group effect.After subdividing social interaction groups,it is found that the social interaction between farmers and the general public and the vulnerable groups can more affect the risk-taking of farmers,and the social interaction between farmers and the pessimistic group and the farmers with high social frequency has greater risk-taking.In addition,through the heterogeneity analysis,it is found that the risk-taking of female farmers,young farmers and farmers with low years of education are more likely to be affected by social interaction.In addition,this paper empirically finds that social interaction can affect farmers’ risk-taking through financial knowledge spillover and social comparison.Furthermore,the income gap within the village positively moderates the influence of social interaction on farmers’ risk-taking,while farmers’ government trust has a negative moderating effect.Finally,further analysis shows that social interaction can also enhance the risk awareness of farmers.(3)This paper studies the influence of social interaction on farmers’ excessive debt,aiming to provide a reference for rural financial governance and financial system stability.Social interaction will promote farmers’ excessive debt and make farmers in the same village show the same group effect.After subdividing the groups of farmers’ social interaction,it is found that the influence of social interaction with different groups on farmers’ excessive debt is foreign.The heterogeneity analysis proved that female farmers,young farmers and farmers with low years of education are more likely to be affected by social interaction.In addition,this paper also finds that excessive debt,deterioration of income and expenditure,and social comparison are the mechanisms of social interaction affecting rural households’ excessive debt.And rural households’ financial literacy and government trust will negatively moderate the promoting effect of social interaction on rural households’ excessive debt.In addition,through further analysis,this paper finds that social interaction also significantly positively affects the risk-taking tendency of farmers and makes the risk-taking tendency of farmers in the same village show the same group effect.The research of this paper has certain theoretical value and practical value.In theory,studying farmers’ financial behaviour from social interaction broadens the research perspective and enriches the research literature on farmers’ financial behaviour.At the same time,it explores the mechanism of social interaction affecting farmers’ financial behaviour and identifies strong influential groups through group segmentation,which deepens the research on social interaction.In practice,improving the utilization efficiency of rural households’ financial resources and promoting rural financial innovation is helpful.It has practical enlightenment for preventing systemic risks in rural areas and maintaining rural financial stability.In addition,this study can provide a reference for optimizing rural financial governance and government supervision and guiding rural financial behaviour.My paper attempts to innovate in the following four aspects:(1)Exploring the financial behaviours of farmers from the perspective of social interaction has enriched the research literature on rural finance.This paper examines how social interactions with other farmers affect individual farmers’ financial decisions to enhance the research on farmers’ financial behaviour.Therefore,this paper concerns rural households’ financial participation,risk-taking and excessive debt,which as examples to qualitatively study whether social interaction will affect rural households’ financial resource utilization behaviours,risk decision-making behaviours and bad financial behaviours.In addition,this paper also constructs a two-stage family decision-making model,taking farmers’ financial investment participation in decision-making as an example,and proves the influence of social interaction on farmers’ financial behaviour through mathematical logic.(2)It introduces mechanisms such as financial knowledge spillover,social comparison and government trust,which enriches the research on social interaction.This paper explores how social interaction affects farmers’ financial behaviour,aiming to explore ways to effectively manage the harmful effects of social interaction and expand the good effects of social interaction.This paper first analyzes the mechanism of social interaction affecting farmers’ financial behaviour based on relevant theories and existing research.Then,taking the farmer’s financial investment participation as an example,a model is constructed to demonstrate the above mechanism through mathematical logic.Finally,in the chapters of the study on the impact of social interaction on farmers’ financial participation,risk-taking and excessive debt,empirical tests are conducted on the mechanisms of financial knowledge spillover,social comparison and government trust.(3)Through group segmentation,this paper focuses on which groups of farmers’ social interaction are more likely to affect farmers’ financial behaviours,thus enhancing the practical value of social interaction research.Most studies on social interaction have analyzed which types of farmers’ financial behaviours are more likely to be affected by social interaction through heterogeneity.Still,few kinds of literature have focused on which types of farmers’ financial behaviours are more likely to be affected by social interaction with which groups.In this paper,the groups of farmers are structurally decomposed by three dimensions:elite degree,happiness and social inclination,which explores further which groups of farmers’ social interaction are more likely to affect farmers’ financial participation,risk-taking and excessive debt,which improves the practical value of this study.(4)This paper analyzes the financial behaviours of farmers by combining the relevant theories of sociology and psychology and tries to explain better the economic decision-making and financial behaviours of farmers under the background of bounded rationality.Firstly,sociological theories such as social comparison,social network and group reference and psychological theories such as dual system decision-making,emotional infection and multi-attribute decision-making are integrated into financial analysis.Secondly,this paper tries to introduce the sociological concept of social comparison into the mechanism research of social interaction and farmers’ financial behaviour.Finally,this paper uses subjective and objective methods to analyze farmers’ financial behaviours comprehensively.For example,the empirical analysis of farmers’ risk-taking and excessive debt also examines the subjective and objective risk-taking and subjective and objective excessive debt of farmers.