A Study On "Poverty Trap" In Rural China Under Credit Constraint

The "poverty trap" in China's rural areas refers to the phenomenon of self-sustaining and self-reinforcing persistent poverty among the rural poor.This paper attempts to explore the two-way relationship between the income of rural households and the extent to which they are subject to credit constraints,and to explain the causes of the "poverty trap" in China's rural areas from the perspective of credit constraints of poor farmers.Firstly,this paper makes a theoretical analysis of the "poverty trap" in China's rural areas under credit restriction,discusses the causes of credit restriction in rural areas and the impact of farmers'income in the allocation of credit funds,establishes the relationship between farmers'income and credit threshold,and analyses the technology choices of poor farmers under credit threshold,and illustrates the poor farmers who are in low-tech agricultural production conditions under credit threshold.Households have a low-level balance of capital and income,which in turn leads to farmers being under the credit threshold for a long time.Finally,based on summarizing the above theoretical and empirical conclusions,the paper puts forward policy recommendations.The innovation of this paper is to construct a two-way influence mechanism between farmers' credit constraints and farmers' income in theory,and explain the credit threshold and the emergence of "poverty trap" in rural areas from the perspective of credit constraints.The above theoretical mechanism is supported by empirical research.The main conclusions of this paper are as follows:(1)Farmers'credit constraints are mainly due to serious information asymmetry and lack of collateral in rural credit market.(2)Information asymmetry,scale effect and lack of collateral lead to more serious phenomenon of credit rationing faced by poor farmers than rich farmers,and explain the cause of "credit threshold" of rural finance.(3)Large amount of credit funds will affect the technology choice of poor peasant households.Microfinance funds can increase the welfare utility of peasant households,but can not affect the technical conditions of poor peasant households.(4)Technical conditions and credit constraints will promote the formation of"poverty trap" in rural areas,that is,poor peasant households with low technology level and middle-class peasant households without credit support will fall into the low level balance of capital and income.(5)The empirical test of ordered probit model and quantile regression shows that low-income farmers will be subject to greater credit constraints,and the marginal income of credit funds increases with the increase of capital stock,which provides empirical support for the existence of low-level equilibrium of capital and income.(6)The policy recommendations of this paper suggest that,on the one hand,efforts should be made to alleviate the information asymmetry and the lack of collateral of poor farmers,on the other hand,large-scale credit support and technical renewal assistance should be provided to poor farmers,and sustained credit support should be provided to newly out-of-poverty farmers.