Financial inclusion, land title and credit: evidence from China

Abstract

PurposeThe purpose of this paper is to study land title’s credit effect from a financial inclusion perspective in China. The focus is both small land holding and poor farmers. Formal and informal finances are considered to test their differences in land title’s credit effect.Design/methodology/approachThe authors use augmented inverse-probability weights of the doubly robust method to test the effect of land titling on the rural credit market by addressing self-selection, endogeneity and heterogeneity concerns.FindingsResults show that the poor, non-poor and small land holders with land titles are willing to borrow more from formal financial institutions. Land titling increases loan accessibility for non-poor and small land holding farmers. As for informal financing, large land holding and non-poor farmers show a decrease in informal lending. Land titling has a financial inclusion effect for some farmers, but poor farmers’ credit restrictions are not entirely solved by land titling.Originality/valueThis is the first study that focuses on the financial inclusion effect of farm land titling in China.