Financial Literacy,policy Trust And Farmers’ Participation In Farmland Mortgage Loan

With the gradual implementation of the rural revitalization strategy,in order to promote agricultural development,revitalize rural assets,broaden farmers’ financing channels,and improve the availability of funds,farmland mortgage loans have been implemented as “China plan” for financial system innovation.Since 2008,the policy has been implemented experimentally from one county to many provinces,which benefits more and more farmers.The farmland mortgage loans can ease the financial constraints caused by the complexity,high cost and collateral shortage of farmers’ applying loans to some degree.However,whether the farmland mortgage loan can achieve expected goals depends on the actively participation of farmers which is also influenced by many factors.The survey results of consumer financial literacy conducted by the financial and consumer rights protection bureau of the people’s bank of China in 2019 show that the overall level of financial literacy of Chinese consumers is still insufficient,the financial literacy status of key groups which are low-income,low educational and non-employment needs to be paid more attention to,and the imbalance of regional financial literacy still needs to be solved.The level of financial literacy can affect the degree of rural residents’ understanding and acceptance of national financial policies such as farmland mortgage loan policy,and then affects their participation.Therefore,it is of great significance to pay attention to the level of rural residents’ financial literacy and its influence.At the same time,farmers’ understanding of the policy and evaluation of their ability vary from person to person,resulting in different levels of policy trust,which will also affect their behavior of participating in the policy of farmland mortgage loan.From the perspective of financial literacy and policy trust,this paper systematically sorts out the current status of related research at home and abroad,and then guided by related theories such as planned behavior theory,land property rights theory,and rural financial theory,it defines the concepts of financial literacy,policy trust,and farmers’ participation behavior of farmland mortgage loan.With survey data of 1,898 households collected in Shaanxi,Ningxia and Shandong Province in January,March,and September 2018 with the theme of “Farmers’ Financial Literacy and Land Property Rights Transactions”,this paper uses factor analysis to measure the level of farmers’ financial literacy,financial knowledge,financial capabilities and financial consciousness,as well as the level of farmers’ policy trust.Based on this,the appropriate instrumental variables are selected,and the Probit model and IV-Probit model are used to test and analyze the effects of the financial literacy(financial knowledge,financial capability and financial consciousness)and policy trust on the farmers’ participation of farmland mortgage loans.Further,this paper uses Bootstrap model to explore and analyze the intermediary effect of policy trust between financial literacy(financial knowledge,financial capability and financial consciousness)and farmers’ participation of farmland mortgage loans.The main conclusions of this paper are summarized as follows:(1)The overall degree of farmers participation in farmland mortgage loans is not high.Among the data of 1,898 farmers,463 of them participated in the farmland mortgage loan,and the participation rate is 24.39%.(2)In the test and analysis of the impact of financial literacy on farmers’ participation in farmland mortgage loan,the financial literacy has a significant positive impact on farmers’ participation in farmland mortgage loan at the statistical level of 1%;From the perspective of sub-dimension,financial knowledge,financial consciousness,and financial capability have positive impact on farmer’s participation in farmland mortgage loan at the significance levels of 5%,1%,and 1% respectively.(3)The policy trust positively affects farmer’s participation in farmland mortgage loans at a significance level of 1%.(4)In the analysis of the intermediary effect of policy trust between financial literacy(financial knowledge,financial consciousness,and financial capability)and farmer’s farmland mortgage participation,policy trust plays a partial intermediary role between financial literacy and farmer’s farmland mortgage participation;and it plays a full intermediary role between financial knowledge and farmland mortgage participation,but plays a partial intermediary role between financial capability or financial consciousness and farmers’ farmland mortgage loans participation.(5)what is more,the control variables including farmers’ age,gender,education level,farmland transfer,other formal loan experiences,the average of household’s annual gross income,the publicity of farmland mortgage loan policy and the distance from nearest local financial institutions et al.have significant impact on farmers’ participation in farmland mortgage loans.Based on the above conclusions,and aiming to broadening the financing channels for farmers,promoting the development of farmland mortgage loan,and enhancing farmers’ enthusiasm for participating in farmland mortgage loans,some policy recommendations are proposed.On the one hand,government and local financial institutions should carry out more financial knowledge education,financial consciousness and financial capability training actively,so as to improve the level of financial literacy of farmers effectively.On the other hand,measures should be taken to broaden the channels of policy publicity to increase farmers’ policy trust level of farmland mortgage loans.What’s more,it is necessary to improve the rural financial market,provide good financial policy participation environment for farmers,and improve farmers’ participation enthusiasm and participation degree of farmland mortgage loan policies.