Social Networks, Informal Finance and Multidimensional Poverty of Farmers

Tan Yanzhi, Zhang Zihao

Journal of Finance and Economics Vol. 43, Issue 03, pp. 43 - 56 (2017)  DOI:10.16538/j.cnkij.fe.2017.03.004

Abstract

In the background of the implementation of precise poverty alleviation and accurate poverty alleviation strategy, this paper constructs the multidimensional poverty evaluation system and uses 2014 China Family Panel Studies (CFPS) data, to empirically examine the mechanism of the relationship between social networks, informal finance and multidimensional poverty of farmers and its mediation effect. It arrives at the conclusions as follows:firstly, social networks can significantly improve the multidimensional poverty of farmers, and play the greatest role in poverty reduction of the middle-level multidimensional poverty farmers; secondly, social networks have significantly positive influences on farmers' informal finance borrowing; thirdly, social networks can alleviate the financing constraints of poor farmers and then improve the multidimensional poverty of farmers by influencing the farmers' informal finance borrowing, namely the improvement of multidimensional poverty to achieve precise poverty alleviation or poverty alleviation follows the mechanism of "social networks to the informal finance, and then to multidimensional poverty of farmers". It means that social networks actually become a "hidden mortgage" in the process of farmers' borrowing, and it makes farmers to gain informal financial funding for improving multidimensional poverty and overcoming poverty.

Keywords

social network; informal finance; multidimensional poverty; mediation effect