Financial inclusion, land title and credit: evidence from China

Abstract

Purpose

The 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/approach

The 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.

Findings

Results 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/value

This is the first study that focuses on the financial inclusion effect of farm land titling in China.

Citation

Jiang, M., Paudel, K.P., Peng, D. and Mi, Y. (2020), "Financial inclusion, land title and credit: evidence from China", China Agricultural Economic Review, Vol. 12 No. 2, pp. 257-273. https://doi.org/10.1108/CAER-01-2019-0020