The Impact of Rural Credit on Cultivated Land Use Efficiency: An Empirical Analysis Using China Rural Revitalization Survey Data

Abstract

Insufficient capital investment coupled with limited land resources significantly limits cultivated land use efficiency (CLUE). China’s rural credit policy system is currently growing, yet the impact of farmer-level credit on CLUE remains understudied. Therefore, this study investigated whether rural credit enhances CLUE by using the China Rural Revitalization Survey (CRRS) data. It explored the impact and mechanism of rural credit on CLUE using least squares regression and mediation models. According to our results, the average CLUE level for farmers in the study area was 0.661, which still had much room for improvement compared with Japan, which also has a large population but limited land. In addition, access to rural credit positively affected CLUE, with cultivated land scale-up and technological applications mediating the rural-credit-driven increase in CLUE. Further analyses of the rural credit allocation mode (RCAM) indicated that farmers’ use of credit for investment in agricultural production factors boosted CLUE more than non-farming allocation of credit funds. These findings suggest that the government should continue to increase support for rural credit while improving the monitoring mechanism for credit allocation to prevent rural credit de-farming from hindering CLUE improvement.