How rural financial credit affects family farm operating performance: An empirical investigation from rural China

Abstract

This paper investigates the effects of current rural financial credit on the operating performance of family farms and the effects of these differences in China. Using the survey data of two national family farm demonstration bases of Wuhan City, Hubei Province, and Langxi County, Anhui Province, in 2016, a three-stage data envelopment analysis model is applied to quantitatively measure the family farms’ operating performance. In addition, the Tobit model and the propensity score matching model are applied to empirically evaluate and examine the overall effects of rural financial credit on family farms, as well as the differences in the effects in different regions and operation types. The evidence implies that in terms of the overall effects, rural formal financial credit has improved the performance of family farms, while rural informal financial credit has had a nonsignificant impact on family farm performance. Moreover, the rural formal financial credit in Wuhan has had a better effect than that in Langxi. Breeding family farms and mixed family farms are more positively affected by rural formal financial credit than are planting family farms.