Research On The Influence Of Rural Household Financing On Farmers’ Income

ABSTRACT:Ever since the reform and opening-up policy, more than30years ago, farmers’income have been increasing in China. However, their incomes are still at a low level compared with that in developed countries and urban areas. Therefore, building a rapid, stable and consistent system to ensure the continuous growth of income for farmers is a major issue of China’s current economic and social development. There is a close relationship between the farmer’s financing behavior and farmer’s economic activities, such as income growth and life improvement. Because of the limited scale of operation, low profit level, high risk rate and etc. of farmer’s business, it is hard for farmers to gain access to financing from formal financial institution, thus they suffer severe money shortage, which further inserts negative impact on farmer’s income. Based on the above, it is necessary to discuss the relationship between rural financing support and farmer’s income growth, especially the relationship between farmer household financing and farmer’s income growth.First of all, based on the related theories, the paper analyze the farmer household financing mechanism on farmer’s income growth, as well as the current situation of farmer household financing’s influence on farmer’s income in Changsha county. Secondly, from three different aspects, which are farmer household financing’s impact on farmer’s income growth, farmer’s income structure and farmer’s income gap, by adopting the MLR and quantile regression, the paper get the empirical results and they are:(1) fanner household financing is beneficial to farmer’s income growth,(2) the formal financing inserts bigger impact on farmer’s income than informal financing,(3) farmer household financing can help improve farmer household’s operational income as well as the wages income, and the positive impact on the farmer is larger than the latter;(4) farmer household financing will in a way widen the gap between different farmer household’s income level, the output elasticity of high-income farmer household is bigger than that of low-income farmer household, which means that high-income farmer household can get higher income than low-income farmer household when gaining the same amount of financing money. At last, based on the above analysis, the paper offers the suggestions on how to realize the innovation of financing suppliers, financing products and guarantee mechanism for farmer household money lenders.