قرضه های کوچک، خود اشتغالی و کارآفرینان در مناطق کمتر توسعه یافته روستایی چین

China is experiencing a transformation, as vast numbers of rural laborers move toward off-farm employment. In such a transformation, the role of credit is unclear. The overall goal of this study is to examine the impact of access to credit by rural households on employment decision-making by rural laborers in China. Based on longitudinal data concerning 1992 rural households in China, this study finds that the use of credit is immense in rural China. Among different types of credit, access to microfinance significantly increased farmers' time working on self-employment activities, especially for the poor households. Credit from formal financial institutions and informal networks had no such effect.

Economic transformation around the world has been a remarkably uniform process of movement of agricultural laborer to off-farm employment. The declining share of output and labor force in agriculture is pervasive in both developed and developing countries. Development in many aspects is defined by the transformation of the labor force — from agriculture to non-agriculture (Huffman, 1991). Available off-farm employment creates job opportunities, promotes entrepreneurs, and contributes to poverty reduction by enabling engagement in income-generating activities in developing countries (Kijima et al., 2006 and Zhang et al., 2006). The expansion of off-farm employment has clearly been happening in China. The exact numbers vary perhaps due, in part to the exact definition of off-farm labor. However, during the 1980s and 1990s, approximately 200 million in the rural labor force found jobs off the farm, with the increased number at more than 6 million per year (NBS, 2010). Estimates of the rise in the share of the rural labor force employed in off-farm sectors range from 35% to 40% during that time. By the mid-2000s, of China's more than 500 million-strong rural labor force, 265 million (more than 50%) had off-farm employment (Zhang, Huang, Li, & Rozelle, 2008). Off-farm laborers in China are employed mainly in wage earning and self-employment. Between the early 1980s and 2000, the number of rural laborers who left home and found wage-earning jobs in the city (or another rural area) rose from 9.3 million to 56 million (de Brauw, Huang, Rozelle, Zhang, & Zhang, 2002). During that time, the number of rural laborers who began small in self-employing enterprises rose from 26.1 million to 79.5 million. While self-employment expanded quickly in the 1980s and 1990s, it was falling by the 2000s. At the same time, wage-earning migration increased steadily and became the primary off-farm employment in rural China (Wang, Huang, Zhang, & Rozelle, 2011). While the share of self-employment decreases as an economy grows, its role in poor areas is important. In poor economies, more than one billion people run their own businesses. Most of them do this because they have no other option. Some of them do this well enough to survive and self-employment incubates the nascence of entrepreneurs (Banerjee & Duflo, 2011). Self-employment should not be regarded as an inferior sector, as it functions as a self-help safety net in less developed areas (Woodruff, 2007). Huang, Wang, Zhi, Huang, and Rozelle (2011) found that the probability of losing jobs during the financial crisis in 2008 was 10% higher for wage-earning laborers than for self-employed laborers. Self-employment can cushion a crisis when the economy is depressed. While off-farm employment plays an important role in agricultural transformation, credit constraint has been considered a primary obstacle. Knight and Li (1997) examined the rural industrialization in rural villages of China and concluded that capital market imperfections caused unequal opportunities for off-farm employment. The costs associated with the search for a job and initial moving expenses could present barriers to migration for poor farmers (Rozelle et al., 1999 and Zhao, 1999). Investing in self-employment also demands capital funds (Li, Rozelle, & Zhang, 2004). The lack of credit has been found to be the primary constraint to the empowerment of the poor through engaging in off-farm employment during agricultural transformation. Credit rationing is pervasive in rural China, particularly for the poor. The state-owned formal financial institutions play dominant roles in providing institutionalized loans in the rural economy. However, these programs, target primarily rural industry and entrepreneurs (Han, 2007). Empirical studies reveal that credit programs of formal financial institutions provide credit mainly to the wealthy (Jia, Heidhues, & Zeller, 2010). Given the large unmet demand for credit in rural China, the rural poor heavily depend on informal credit networks (i.e. friends, relatives, and usurers). Alongside the constraints in both formal and informal credit markets, the development of microfinance in China is just developing. Microfinance was introduced in China in the mid-1990s, through international aid programs for poverty alleviation (Sun, 2004), but it had not been significantly scaled up. The stress of emerged financial risks and the priority of government's control over financial resources through state-owned banks caused depression of microfinance in the late 1990s (Holz, 2001). Since the early 2000s, China's government has started to promote microfinance through formal financial institutions and non-governmental organizations (NGOs). Governmental microfinance has performed poorly in targeting, financial sustainability and program impacts (Park & Ren, 2001). NGO microfinance is expected to be pro-poor. For a long time, restructuring the rural financial market has been viewed as the central policy in China's rural development strategy. The No.1 State Council document for each year between 2004 and 2010 highlighted a liberalized and diversified rural financial market. While these policy initiatives clearly encouraged a shift in the structure of the rural financial market, it is unclear what the role of the rural credit market is, in affecting the rural labor market. Specifically, we would like to know how farmers' access to different forms of credit affects their decision-making about employment. Does credit from different sources—institutional lender or formal credit, informal credit network or microfinance—have different impacts on farmers' length of employment in farming, wage earning, and self-employment? Which credit source has a larger effect on farmers' off-farm employment, particular self-employment? The overall goal of this paper is to fill the gap. Specifically, we focus on two objectives. First, we examine farmers' credit access from various sources and their time allocation to different activities. Second, we analyze and compare the effects of credit access from different sources on farmers' off-farm employment in the wage-earning and self-employed sector. Because of the ambitious nature of the goals and the high cost of data collection for the entire microfinance sector, we necessarily must limit the scope of the paper. In particular, in this study we examine mostly farm-level credit access in the North and Northeastern sections of China; we did not survey enterprises and non-farm residents. Second, this is not a study of all microfinance in China. We focus on China's NGO microfinance, as it has more implications for the rural poor. Third, as an ex post evaluation study, we could not create a baseline survey, a well-defined control group, or other means of identification. Instead, based on fundamental events of the credit history of surveyed households, retrospective panel data were relied on.1 To meet the goals and objectives of the study, the rest of the paper is organized as follows: To begin with, we introduce data collection and sampling. The next section describes the dynamics of farmers' credit access and off-farm employment in the sample villages. We precede the multivariate analyses with a conceptual basis of self-employment. Then we estimate the impacts of credit access on farmers' off-farm employment time. In the final section, we draw our conclusions.

This study examined farmers' credit access in rural China and its impacts on labor decisions concerning off-farm employment. Based on longitudinal data consisting of individuals from 1992 rural households over the period between 2006 and 2009, the research finds that the use of credit has increased rapidly in rural China. While off-farm employment is rising and wage-earning migration is the primary form of off-farm employment, self employment increased significantly for microfinance clients. Institutional lending and credit through informal networks, however, had no such effect. China has been experiencing an agricultural transformation as vast numbers of rural laborers have moved to off-farm employment, which has promoted entrepreneurship and contributed to poverty reduction. However, the lack of credit has become a primary constraint for the poor who want to start up and engage in off-farm activities, tapping economic gains through diversifying income sources. NGO microfinance can be an effective tool to link the poor to off-farm employment, and especially to build up the entrepreneurs by promoting self employment. This case study sketches such a scenario. The findings of this study have important policy implications. Indeed, NGO microfinance has been perceived by the Chinese government as containing high risks, and thus its development in China is regulated and depressed (Zhang, 2006). In recognition of the large potential of NGO microfinance to promote farmer's entrepreneurship and other off-farm engagement (as shown in this study), the intellectual bias and regulations against NGO microfinance should be re-visited. Many rural labors may find difficulties in migrating to urban for wage-earning and the majority of rural self-employment by the poor is small business. NGO microfinance, being small, is effective in promoting agricultural transformation in rural China. Internationally, microfinance is being commercialized in developing countries. Such a transformation has great implications in rural development as these new lending modalities played an increasing role in low-income areas (Cull, Demirguc-Kunt, & Morduch, 2009). However, there is also worry about the commercialization of microfinance as this might abandon its mission to serve the poor (Christen & Drake, 2002). In China, microcredit companies and non-bank financial institutions are also emerging and the loan outstanding reached 470 billion Yuan in 2012 (He, 2013). However, these financial innovations are motivated by commercial interests and targeted mainly on rural enterprises (Jiao, 2013). While the comparison between the impacts of NGO and commercial microfinance on the poor is interesting, it is beyond the scope of this study. Finally, the findings of this study are not sufficient to confirm or disprove the dynamism of self employment in rural China. Indeed, the paper provides evidence that the self-employed in rural China are young, educated and entrepreneurial. A small amount of loans can promote rural households' engagement in self employment. On the other hand, we find that much of the self employment in sample villages was by own-account workers and some of the businesses run by the poor had low profitability. There is a stark difference between own-account workers whose businesses are basically a self-help safety net and the self-employed who hire paid workers, implying great and genuine entrepreneurship. A notable observation from field work is, although credit access helps the poor to start businesses that can be profitable, the small business owner is by no means a natural entrepreneur. Some of the self-employed remain small and are doomed to be unprofitable. As Banerjee and Duflo (2011) pointed out, entrepreneurship is too hard in poor economies and financing is not the only barrier.