The impact of fintech development on the entrepreneurial behavior of farmers: evidence from the China Household Finance Survey

Abstract

Fintech is disrupting the traditional financial models with the power of technology. Will it solve the problems faced by farmers in starting their own businesses and stimulate the vitality of rural entrepreneurship? In this paper, we focus on the impact of fintech development on the entrepreneurial behavior of farmers in China. First, we theoretically analyze the effects of fintech development on the entrepreneurial behavior of farmers and put forward the corresponding theoretical hypotheses. Second, using data from Baidu search index and the China Household Finance Survey (CHFS), we employ a Probit model to verify our theoretical hypotheses. Our findings suggest that (1) fintech development encourages farmer entrepreneurial behavior, (2) it achieves this by alleviating credit constraints, information constraints, and risk aversion effects, (3) in terms of the type of entrepreneurship, the development of fintech mainly promotes survival entrepreneurship among farmers, while the entrepreneurial effect of fintech is more significant among farmers with low education level, low income level and in the central and western regions. Overall, our study provides timely insights into boosting farmer entrepreneurship in emerging countries such as China by leveraging the potential of fintech.

Keywords: Credit constraints; Farmers’ entrepreneurial behavior; Fintech; Information constraints; Risk aversion.

Figure 1

Mechanism of fintech development affecting entrepreneurial behavior of farmers.