Analysis of Capital Constraints and Influence on the Choice of Rural Households’ Entrepreneurial Fields: Evidence from Jiangsu Province in China
Science Journal of Business and Management
Volume 6, Issue 2, April 2018, Pages: 45-54
Received: Aug. 9, 2018;
Published: Aug. 13, 2018
Views 974 Downloads 81
Yuan Mo, School of Finance, Nanjing University of Finance and Economics, Nanjing, China
Shaoda Xu, School of Finance, Nanjing University of Finance and Economics, Nanjing, China
Junhong Meng, School of Finance, Nanjing University of Finance and Economics, Nanjing, China
The “financing difficulty” and “high expense of financing” in rural areas are the main reasons that restrict the development of rural households’ entrepreneurship, and the supply-side reform provides an opportunity to improve the rural financial environment. In this paper single variable Probit model is used, Heckman probit model and 1376 Jiangsu micro survey data to analyze the reason of farmers’ entrepreneurship. The result shows that the capital constraints exist widely in the entrepreneurship. Different kinds of capital constraints also have different effect on the field choice of farmers’ entrepreneurship. Farmers with higher property income and the more formal credit invest more probably in the non-agricultural industry, while farmers with higher formal credit frequency and the identity of creditable household will with high probability engage in the agricultural sector. In addition, the factors such as household’s age, political capital, area of cultivated land, and target recognition ability also have a significant impact on the field choice of entrepreneurship. The conclusions can provide implications for the supply-side structural reform of rural financial institutions and the policy-making of supporting entrepreneurship.
Analysis of Capital Constraints and Influence on the Choice of Rural Households’ Entrepreneurial Fields: Evidence from Jiangsu Province in China, Science Journal of Business and Management.
Vol. 6, No. 2,
2018, pp. 45-54.
Huang, Zuhui and Yu, Ning. New rural business entities of agricultural sector: status quo, constraints and development root – a case study of Zhejiang Province [J]. Chinese rural economy, 2010 (10), pp. 16-26.
Lu, Yajuan, Zhang, Longyao and Xu, Yuyun. Access to finance and rural household entrepreneurship – an empirical study based on CHARLS data [J]. Economic theory and business management, 2014 (10), pp. 89-99.
Evans D S, Jovanovic B. An estimated model of entrepreneurial choice under liquidity constraints [J]. Journal of political economy, 1989, 97 (4), pp. 808-827.
Holtz-Eakin, D., and Rosen, H. Entrepreneurial decisions and liquidity constraints [J]. RAND Journal of Economics, 1994 (25-2), pp. 334-337.
Lindh, T., and Ohlsson, H. Self-employment and windfall gains: Evidence from the Swedish Lottery [J]. Economic Journal, 1996 (106-439), pp. 1515-1526.
He, Mingsheng and Shuai, Xu. Study on farmers’ credit demand and credit gap under financial constraint [J]. Journal of financial research, 2008 (7), pp. 66-79.
Bianchi M. Credit constraint, entrepreneurial talent and economic development [J]. Small business economic, 2010, 34, pp. 93-104.
Jia, Xiangping, Xiang, Cheng and Huang, hukun. Microfinance, self-employment, and entrepreneurs in less developed areas of rural China [J]. China economic review, 2013 (27), pp. 94-103.
Liu, Jie and Zheng, Fengtian. Liquidity constraint on entrepreneurial choice behavior of peasant households: based on survey of 894 families in Shanxi, Gansu and Zhejiang Provinces [J]. Finance and trade research, 2011 (3), pp. 28-35.
Xiao, Huafang, Bao, Xiaolan. Credit constraint on farmers’ entrepreneurship – empirical study based on 930 micro enterprises in Hubei Province [J]. Journal of agrotechnical economics. 2011 (2), pp. 102-109.
Dongliang Cai, Quanyun Song, Shuang Mab, Yang Dong, Qiuhua Xu. The relationship between credit constraints and household entrepreneurship in China International [J]. Review of Economics and Finance. 2017, http://dx.doi.org/10.1016/j.iref.2018.03.024.
Cheng, Yu and Luo, Dan. Farmers’ entrepreneurship choice behavior under credit constraint – empirical study based on survey of Chinese farmers [J]. Chinese rural economy, 2009 (11), pp. 25-38.
Liu, Xinzhi, Liu, Yusong and Li, Lu. A study on the impact of entrepreneurial environment on farmers’ behavior of starting businesses [J]. Journal of Southwest University (natural science edition), 2015 (4), pp. 1-8.
Peng, Yanling and Kong, Rong. Study on collateral of contracted land management right, liquidity constraint and farmers’ different choice of entrepreneurship fields [J]. Journal of agrotechnical economics, 2016 (5), pp50-59.
Lv, Huiming and Zhu, Yuxuan. Study on development model of family farms based on survey – a case study of Ningbo City of Zhengjiang Province [J]. Issues in agricultural economy, 2015 (4), pp. 19-26.
Liu, Tingting. Financing difficulty of new agricultural business entities and the reform path of financial support for agriculture [J]. Rural economy, 2016 (3), pp. 73-77.
Cui, Ningbo and Song, Xiujuan. Status quo and further study of new agricultural business entities – a case study of Harbin City. [J]. Journal of Northeast Agricultural University (Social science edition), 2015 (3), pp. 19-25.
Zheng, Baohua and Lu, Yumei. Research on the impact of entrepreneurship environment in the agriculture technology park on entrepreneur behavior [J]. Journal of agrotechnical economics, 2016 (11), pp. 115-122.
Yang, Jun, Zhang, Longyao and Jiang, Yan. Study on social financial resource, family financing and farmers’ entrepreneurship based on CHARLS survey data [J]. Journal of agrotechnical economics, 2013 (11), pp. 71-79.
Escobal, J. The determinants of nonfarm income diversification in rural Peru [J]. World Development, 2001 (29-3), pp. 497-508.
Peng, Keqiang and Liu, Xiliang. Increase of farmers’ income, accessibility of formal credit and non-agricultural entrepreneurship [J]. Management world, 2016 (7), pp. 88-97.
Ping, Xinqiao, Zhang, Haiyang, Hao, Chaoyan and Liang, Shuang. Study on the formation of farmers’ financial constraint [J]. Economics information, 2012 (4), pp. 10-14.
Zhong, Funing. Correct understanding of food security and the cost of agricultural labor [J]. Issues in agricultural economy, 2016 (1), pp. 4-9.
King RG, Levine R. Finance, entrepreneurship and growth [J]. Journal of monetary economics, 1993 (32), pp. 513-542.
Liu, Xichuan, Chen, Lihui and Yang, Qiming. Relationship between farmers’ formal credit demand and interest rate: based on empirical study using TobitⅢ model [J]. Management world, 2014 (3), pp. 75-91.
Wang, Shuhua, Yang, Youzhen and Su, Jian. The dynamic impact mechanism of farmers’ credit constraint and income gap: based on estimation of the panel joint system [J]. Economic survey, 2014 (1), pp. 26-31.
Behr P,. Entzian A, Guttler. How do lending relationships affect access to credit and loan conditions in micro lending [J]. Journal of banking and finance, 2011 (35), pp. 2169-2178.
Hu, Jiangxia and Wen, Chuanhao. The relationship between social network, risk recognition ability and sustainable livelihood of migrant workers [J]. Technology economics, 2017 (4), pp. 110-116.
Yang, Delin, Hu, Xiao and Feng, Ya. Internet application and entrepreneurship performance: the intermediary role of social capital [J]. Technology economics, 2017 (4), pp. 53-62.