Research On The Impact Of Financial Literacy On Farmers’ Ability To Finance Formal Credit

The 20 th Party Congress drew a grand blueprint to comprehensively promote the great rejuvenation of the Chinese nation with Chinese-style modernization,and the No.1 document of the Central Government in 2023 pointed out that the most arduous and heavy task of comprehensively building a socialist modern country is still in the rural areas.Statistical survey shows that nearly 82% of the large-scale business entities believe that the biggest obstacle affecting the survival and development of farmers is the difficulty of financing.The "Guidance on Financial Services for Rural Revitalization" clearly points out the detailed target planning and specific measures for financial support to rural development,aiming to create capital vitality for the economic development of "three rural areas".With the diversification of financial products and services and the strategy of rural revitalization,more and more people are concerned about the possible impact of financial literacy on the financing of farmers.The theoretical research results on the financing of farmers and the connotation and measurement of financial literacy in the field of financial literacy are relatively well developed and have achieved a stage victory,but there are still some issues that need to be studied in a more comprehensive and detailed manner in some detailed areas.Based on this,this paper investigates the impact of financial literacy on farmers’ formal credit financing ability in order to alleviate the most difficult financing problems in the process of farmers’ survival and development,and help commercial banks and other financial institutions to carry out credit business smoothly.This paper focuses on the refinement of farmers’ formal credit financing ability,and explores the impact of financial literacy on farmers’ formal credit financing ability from the theoretical and empirical perspectives respectively.Firstly,the background and significance of the study are explained,the previous research results are summarized and analyzed,and the concepts of financial literacy,farmers and financing ability are defined,and information asymmetry theory,game theory,credit rationing theory and financial exclusion theory are organized.Next,a dynamic game model with incomplete information is chosen to theoretically analyze the relationship between financial literacy and farmers’ formal credit financing ability,and to propose a research hypothesis.Finally,the formal credit financing ability of farmers is further refined into productive financing ability and unproductive financing ability,and measured from both quantitative and temporal dimensions,and the impact of financial literacy on the formal credit financing ability of farmers is investigated using a multiple linear regression model based on the micro data obtained from the CHFS2017 survey.In addition,the heterogeneity of the effect of financial literacy is analyzed from two perspectives,namely education level and age,and endogeneity and robustness tests are conducted.The empirical results show that financial literacy affects farmers’ formal credit financing ability mainly through two paths: alleviating the degree of information asymmetry and reducing the probability of default occurrence,and financial literacy has insignificant effects on farmers’ productive financing ability and significant positive effects on unproductive financing ability,and the effects are greater on the amount of unproductive financing for households with low education level,greater on the duration of unproductive financing for households with high education level The effect on the non-productive financing ability of older farmers is the largest,the effect on middle-aged farmers is the second largest,and the effect on young farmers is the smallest.Based on the above findings,this paper puts forward corresponding suggestions from three aspects,namely,government departments,financial institutions and farmers themselves,in order to provide new ideas for the improvement of farmers’ formal credit financing capacity.Government departments can organize financial knowledge popularization activities through diversified channels,and also increase capital investment in rural areas to stimulate rural development potential and gradually improve the rural financial market system.Financial institutions should refine the classification of rural households and improve the credit evaluation system system,and also strengthen cooperation with relevant rural departments to promote financial knowledge.Farmers themselves should take the initiative to strengthen their financial knowledge and master the loan operation process of financial institutions,and also discipline their own behavior to improve their credit level.