Information and communication technology adoption and credit access in rural China

Abstract

This study examines the impact of information and communication technology (ICT) adoption on farmers’ decision to access to credit and the joint effects of ICT adoption and access to credit on household income. Both recursive bivariate probit model and a selectivity-corrected ordinary least square regression model are employed to analyze the 2016 China Labour-force Dynamics Survey data. The empirical results show that ICT adoption increases the probability of credit access by 13.9% in rural China, and it empowers rural women and farm households in the relatively less developed regions to access to credit. ICT adoption and access to credit affect household income differently. ICT adoption significantly increases household income with a larger impact at the upper-income distributions. However, access to credit exerts a negative and significant impact on household income due primarily to the reason that farmers do not use the acquired credit to invest in the income-generating farm and off-farm business activities. Our findings suggest that improving rural ICT infrastructure to enhance farmers’ ICT adoption and developing ICT-based financial products to enable households to access sufficient funds can help improve rural household welfare.