Does the Use of Digital Finance Affect Household Farmland Transfer-Out?

Abstract

Digital finance offers opportunities for inclusive growth in rural areas. This study aims to clarify how digital financiers affect farmland transfer-out. Using the data from the China Household Finance Survey in 2015, this paper establishes Probit and Tobit models to empirically analyze the impact and mechanisms of digital finance on household farmland transfer-out. The study finds that digital financial use significantly increases the probability and proportion of farmland transfer-out and that this effect is greater among households with older heads and lower household per capita income and financial accessibility, suggesting that digital finance has an important role to play in reducing inequality and promoting inclusive growth. Further analysis reveals that off-farm employment and information channels are mediating mechanisms through which digital finance facilitates farmland transfer. Specifically, on the one hand, the financial function of digital finance increases the share of employment and entrepreneurship among rural households. In terms of industry and skill type, digital finance promotes the entry of farmers into tertiary employment, facilitates off-farm employment for low and medium-skilled farmers, and has no impact on the employment of high-skilled farmers. On the other hand, the information function accompanying digital finance broadens households’ access to information, both of which have a favorable effect on farmland transfer-out. This study provides new ideas for supporting agricultural land transfer from a digital finance perspective.