Effects of Farmers’ Participation in Inclusive Finance on Their Vulnerability to Poverty: Evidence from Qinba Poverty-Stricken Area in China

Abstract

China’s new poverty alleviation strategy has been focusing on the 14 undeveloped poverty-stricken areas including Qinba, which faces frequent natural disasters, fragile ecological environment, and high incidence of poverty. With the government initiation, farmers in Qinba have participated in inclusive financial services. Based on 587 rural household field survey data in Qinba area, this article examines farmers’ participation level in inclusive finance. It uses the VEP model to measure the vulnerability to poverty. Then it empirically analyzes the effects of farmers’ participation in inclusive finance on their vulnerability to poverty. The study finds that: first, inclusive finance impacts farmers’ risk coping ability, thus affecting the vulnerability to poverty. Second, farmers’ participation level of savings, micro-credit, and commercial insurance is 48.55%, 17.89%, and 12.44%, respectively. Third, farmers’ participation in savings and commercial insurance reduces their vulnerability by 0.05 and 0.126, while micro-credit does a not have a significantly positive impact. Last, it puts forward the policy implications.