The long-term lag of farmers’ income growth is one of the distinctive shortcomings in the process of China’s economic development. How to make up this short board fast is a difficult question for China’s economy. The lack of credit access is widely recognized as the key reason of sustained poverty of farmers, and the lack of effective collateral is the root cause of credit constraints. Empowering farmers to use land management rights as loan collateral provides a new way to solve the problem of credit constraints and income growth for farmers. It is of great significance to scientifically evaluate the policy effect and identify its mechanism for future policy-making.
Based on the panel data of 1831 counties in China from 2005 to 2017, this paper uses the DID method to study whether the pilot policy of rural land mortgage loans has leveraged the income growth of farmers. The results show that: Firstly, from the effect, rural land mortgage loan policy has significantly increased the income of farmers. This conclusion is still tenable after multiple robustness tests. Secondly, from the trend, rural land mortgage loan policy has a long-lasting effect on farmers’ income growth, and this effect continues to strengthen with the increase of implementation years. Thirdly, from the mechanism, the income leverage effect of rural land mortgage loans can be realized not only through credit access, but also through promoting rural economic growth, improving agricultural productivity and promoting non-agricultural transfer of labor force. Fourthly, from the perspective of heterogeneity, the income increasing effect of land mortgage loan policy plays a better role in areas with good economic basis, high land value and good system quality.
The findings show that the empowerment of rural land can “awaken sleeping capital” and transfer “dead assets” into “living capital”, which is the key point for the income growth of farmers. And we should attach importance to improving the economic environment and system quality on which the effective implementation of policies depends. Our conclusions provide important implication for future promulgation and adjustment of related policies.
The possible marginal contributions of this paper are that: Firstly, it makes an overall evaluation of rural land mortgage loan policy by using county-level panel data, which can not only provide supplementary evidence for the policy effect from the macro data level, but also overcome the shortage of micro cross section data. Secondly, compared with most literatures in this field, by using the DID method, it can identify the net effect of the policy accurately and eliminate other factors that may affect farmers’ income growth. Thirdly, the conclusions about the mechanism and heterogeneity of the policy are supplements to the existing literature.