Heterogeneous Impact of Farmer Credit: An Empirical Investigation based on IVQR Model

This article empirically estimates the economic impact of farmer credit by IVQR model, which takes both the heterogeneous effect and the endogenous problem into account, using a survey data of 3,000 households from rural China in 2003. Our results show that both formal and informal credit significantly contribute to the farmers' operational income on the whole. However, its impact is heterogeneous on the outcome distribution. The credit does not significantly contribute to the outcome of the poorest and richest farmers, but it benefits the middle and low income farmers, for whom the output elasticity is about 0.08. Since the rural credit allocation leans to rich farmers in China, there exists efficiency loss. The estimators obtained by 2SLS and QR both involve apparent biases.