The influence of financial knowledge on the entrepreneurship behaviors of landless rural households: an empirical analysis based on IV-Heckman Model

SUN Guanglin1 LI Qinghai2 YANG Yumei3

(1.School of Finance, Nanjing University of Finance and Economics)
(2.School of Economics, Nanjing University of Finance and Economics)
(3.School of Economics & Management, Beijing Forestry University)
【Knowledge Link】financial knowledge

【Abstract】This paper used the survey data collected from landless rural households in Shandong and Jiangsu provinces in 2018 and designed a measurement system of financial knowledge of the landless rural households. By using the IV-Heckman model and an intermediary effect method, the study empirically examined the influence of financial knowledge on the entrepreneurial behaviors of landless rural households who had lost their land passively. The findings were as follows. (1) Financial knowledge had a significantly positive influence on the entrepreneurial decision-making and performance of the rural households who had lost their land. The improvement of financial knowledge level could promote their initiative to participate in entrepreneurial activities and improve their entrepreneurial performance. (2) Financial knowledge could promote the participation in entrepreneurial activities of landless rural households because of their improved access to financial channels and their increased ability to obtain financial capital. (3) Financial knowledge could improve the participation in entrepreneurial activities of landless rural households by increasing their risk preferences, but could not improve their entrepreneurial performance.

【Keywords】 landless rural household; financial knowledge; entrepreneurship; mediating effect;

【DOI】

【Funds】 Youth Project of National Natural Science Foundation of China (71503118) the Young Scientists Fund of Humanities and Social Science Research Projects of the Ministry of Education (14YJC790067)

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    Footnote

    [1]. ① Landless rural households refer to the agricultural population whose agricultural land (including cultivated land, forest land and garden land) that has been occupied due to the needs of urban construction and has lost their land management rights in the process of promoting urbanization. They included not only the rural households who have completely lost their land, but also the rural households whose per capita remaining actual cultivated land was less than 0.3 mu (Han, 2009). Whether the state expropriates land in accordance with relevant laws or the rural collective takes agricultural land as an asset to participate in the construction of industrialization and urbanization, it will make rural households lose land management rights or use rights, and rural households are often in a passive position in this process. Therefore, landless rural households are also called passive landless rural households. It is worth noting that the passive landless rural households mentioned in this paper do not include rural households who have moved out into cities and towns for a long time and have stable jobs and fixed residence, voluntarily giving up their land contracting management rights, but include those who have rural household registration before losing land but do not have rural household registration after losing land, and those who still have rural household registration after losing land. In addition, unless otherwise specified, the landless rural households mentioned below refer to passive landless rural households. [^Back]

    [2]. ① In this paper, financial capital refers to whether landless rural households can obtain loan support. For variable definitions, see Table 4. [^Back]

    [3]. ① The entrepreneurial atmosphere reflects the degree of respect for the entrepreneurial behaviors of the landless rural households in the external environment. The stronger the entrepreneurial atmosphere is, the more likely it will inspire the landless rural households to take the initiative to start a business, thereby affecting the entrepreneurial decision-making, but the entrepreneurial atmosphere has no direct impact on the entrepreneurial performance of the landless rural households. Therefore, the entrepreneurial atmosphere is only included in the entrepreneurial decision-making equation. [^Back]

    [4]. ① The general Heckman model can only consider the problem of sample selection, but cannot consider the endogenous problem of financial knowledge at the same time. [^Back]

    [5]. ② The processing process of endogenousness of financial knowledge in the IV-Heckman model is shown please refer to Equation (1) and Equation (2), which will not be repeated in order to save space. [^Back]

    [6]. ③ This paper uses the mediating effect test process proposed by Wen et al. (2004) to test the mediating effects of information channels, risk appetite, and financial capital. [^Back]

    [7]. ① For detailed inspection procedures and equations, see Wen et al. (2004). [^Back]

    [8]. ② Since the landless rural households are concentrated in villages around the city center or small towns, considering the availability of samples, the research team mainly randomly selected sample villages in the suburbs around towns. [^Back]

    [9]. ① Cronbach’s α value is always greater than 0.8; factor loadings are shown in Table 1, and they are all greater than 0.6; the KMO test value is 0.836, which is greater than 0.6. [^Back]

    [10]. ② Financial knowledge is also known as financial literacy in some literature. The concept of financial knowledge is used in this paper in accordance with most literature. [^Back]

    [11]. ① The variance inflation factor method is used to test the multicollinearity between variables. The results show that the maximum value of VIF is 4.36, which is less than the critical value of 10, indicating that there is no multicollinearity between variables. [^Back]

    [12]. ② The Durbin-Wu-Hausman (DWH) test value is significant at the statistical level of 1%, indicating that financial knowledge is an endogenous explanatory variable. The F value in the first stage regression is greater than 10, and the t value of the instrumental variable is significant at the statistical level of 1%, indicating that the estimation results of Regression 1 and Regression 2 are valid. [^Back]

    [13]. ③ The value mills ratio of the test on the sample selection deviation is significant at the statistical level of 1%, indicating that there is a sample selection bias in the entrepreneurial decision-making equation. [^Back]

    [14]. ④ The t value of the instrumental variable is significant at the statistical level of 1%, the F value in the first stage regression is significantly greater than 10, the value mills ratio of the test on the sample selection deviation is significant at the statistical level of 1%, and the identification variable of entrepreneurial atmosphere is significant at the statistical level of 1%, indicating that the estimated results of the IV-Heckman model are valid. [^Back]

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This Article

ISSN:1006-4583

CN: 11-3586/F

Vol , No. 03, Pages 124-144

May 2019

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Article Outline

Knowledge

Abstract

  • 1 Introduction
  • 2 Literature review
  • 3 Theoretical framework and research hypotheses
  • 4 Model construction
  • 5 Data sources and variable setting
  • 6 Empirical result analysis
  • 7 Conclusions and policy implications
  • Footnote

    References