Influence of Formal and Informal Finance on Farmers’ Decision Making and Effectiveness in Business Startup——A Perspective from Substitution Effect
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Influence of Formal and Informal Finance on Farmers’ Decision Making and Effectiveness in Business Startup——A Perspective from Substitution Effect
LIU Yu-song1,2, QIAN Wen-rong1,2
1.China Academy for Rural Development, Zhejiang University, Hangzhou 310058, China; 2.School of Public Affairs, Zhejiang University, Hangzhou 310058, China
Abstract Based on the CFPS2014 survey data, this paper establishes the Probit model and multiple linear regression model and studies the influence of formal and informal finance on farmers’decision making and effectiveness in business startup. Results show that both formal and informal finance have significant positive effect on farmers’ decision making of business startup, though informal finance shows a greater impact than formal finance. Such positive influence is also seen on farmers’ business performance, such as scale and profitability. There is a substitution effect between formal and informal finance, which means farmers will turn to informal finance if their funding needs can’t be satisfied by formal finance.
LIU Yu-Song,JIAN Wen-Rong. Influence of Formal and Informal Finance on Farmers’ Decision Making and Effectiveness in Business Startup——A Perspective from Substitution Effect. Economic Survey, 2018, 35(2): 041.
2018, Vol. 35 
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