An Empirical Analysis Of The Effect Of Agricultural Credit On Agricultural TFP

Agriculture economy, which is the basis of Chinese rural economy, is playing a very important role in Chinese real economy. Currently, China is at the stage of transferring from traditional agriculture to modern agriculture. Thus, merely relying on capital and labor inputs has been unable to drive the agriculture production, and the future rural economy development will fully depend on agricultural total factor productivity. However, due to the particularity of agricultural goods, the farmers and agricultural enterprises must rely on the external funding rather than self-accumulation to ramp up the agricultural TFP. The article studies the relationship between financial development and agricultural TFP from the perspective of agricultural credit.Firstly, we review the evolution of financial development theory and the rural financial theory. Then we card the article that Chinese scholars using empirical finance development theory and the rural financial theory demonstrate the relationship between financial development and economic growth.Secondly, according to the rural financial market reform since 1978, we classify the current stages of Chinese agricultural credit market. Then we describe the status quo of our agricultural credit from the amounts of absolute and relative and the body of demand and supply. Finally we analyse the agricultural credit system, as well as raise the existing problem.Then, we estimate agricultural TFP via DEA-malmquist based on 1998-2008 provincial statistics. The results show that in eastern, central, western and northeastern of China, the development of agricultural TFP is convergence. Then we evaluate the influence between agricultural credit and agricultural TFP. The results show that the agricultural credit has positively affected the agricultural TFP, and its internal function mechanism works mainly through two ways:1) the agricultural credit has improved the liquidity, promoted the efficiency of investment as well as scale economy, and then ramp up the comprehensive technical efficiency,2) the agricultural credit has raised innovation capital for technical advance, diversified venture capital risks, and promoted the transfer and application technical achievements.At last, we summarise the research results and propose policy suggestions on the development of rural economy and further research direction of this article.