Research On The Impact Of Credit Constraints On Farmers’ Consumption

In the context of "dual cycles" and rural revitalization,rural consumption has become an important force driving my country’s economic growth.How to release the potential of rural consumption has attracted much attention of scholars.As an important part of rural finance,credit can help farmers alleviate liquidity constraints,expand production scale and stimulate consumption.However,China’s farmers are generally subject to credit constraints,which may hinder the release of rural consumption vitality.Therefore,this paper studies farmers’ consumption from the perspective of credit constraints,and explores the impact of credit constraints on Farmers’ consumption level and consumption structure.Firstly,this paper combs the relevant literature,analyzes the mechanism of the impact of credit constraints on Farmers’ consumption and makes assumptions,combined with liquidity constraint theory,preventive savings theory,demand elasticity theory and information asymmetry theory,and analyzes the current situation of farmers’ credit constraints and consumption in China.Then using multiple regression model analysis,it is found that credit constraints will not only reduce farmers’ consumption level by 18.5%,but also reduce the consumption structure index by 2.4 percentage points.At the same time,it verifies the intermediary effect of income in the impact of credit constraints on Farmers’ consumption level.Considering the possible sample self selection errors,this paper uses the propensity score matching method to study.It is found that the credit constraint reduces the consumption level of farmers by 19.6% and the consumption structure index by 3.07 percentage points,which means that the multiple regression model underestimates the negative impact of credit constraint.Then,the heterogeneity was analyzed by propensity score matching method.From the perspective of the types of credit constraints,demand-based credit constraints have a negative impact on Farmers’ consumption level and consumption structure at the same time,while supply-based credit constraints only have a significant negative impact on consumption level;From a regional perspective,when farmers in the East are subject to credit constraints,they have a significant negative impact on the consumption level,while when farmers in the West are subject to credit constraints,they have a significant negative impact on the consumption level and consumption structure;From the perspective of income level,credit constraints have a significant negative impact on the consumption level of poor and middle-income farmers,but only middle-income farmers have a significant negative impact on the consumption structure;From the perspective of business scope,credit constraints only have a significant negative impact on the consumption of farmers only engaged in agricultural management.Finally,based on the empirical conclusions,this paper puts forward relevant policy suggestions from the perspective of government,financial institutions and farmers to alleviate farmers’ credit constraints and release rural consumption potential.