An analysis of China’s reforms on mortgaging and transacting rural land use rights and entrepreneurial activity
ISSN: 0002-1466
Article publication date: 21 January 2020
Issue publication date: 21 May 2020
Abstract
Purpose
The purpose of this paper is to investigate the economic relationship with recent changes in China’s land use policy and rural development through innovation and entrepreneurship.
Design/methodology/approach
The first issue of economic importance is in understanding the market value of land use rights (LUR) transactions. To examine this, the authors build an argument around the idea of economic and marginal rents from Ricardo. The second issue relates to the extent by which deepening the rural financial landscape by allowing the mortgaging of LUR will promote and advance much needed entrepreneurial activity. To explore this issue, the authors draw on Schumpeter. The empirical contribution is based on a survey of 1,465 farm households in Gansu, Henan, Shaanxi and Shandong provinces.
Findings
In an endogenous Two-Stage Least Squares model, the authors find a positive and significant relationship between a willingness to mortgage LUR and entrepreneurship, which suggest that the new policy may well meet that objective. However, the authors do not find that entrepreneurs alone will have a willingness to mortgage LUR; non-entrepreneurs – traditional farmer types – would also be willing to mortgage LUR, but with a caveat that either group already has a disposition or demand for credit.
Originality/value
The value of the analysis is to provide an evidence to understand the market value of LUR transactions and to study the relationship between mortgage of LUR and entrepreneurial activity.
Keywords
Acknowledgements
Funding for this research from the China National Nature Science Fund with ratification numbers 71903141 and 71773094, Humanities and Social Sciences of Education Ministry with ratification number 18YJC790125 and China Postdoctoral Science Foundation with ratification number 2019M653834XB are gratefully acknowledged. The authors would like to express gratitude to Calum G. Turvey (W.I. Myers Professor of Agricultural Finance at Cornell University) for his great contribution and helpful comments. All errors are the authors’ own.
Citation
Peng, Y. and Kong, R. (2020), "An analysis of China’s reforms on mortgaging and transacting rural land use rights and entrepreneurial activity", Agricultural Finance Review, Vol. 80 No. 3, pp. 377-400. https://doi.org/10.1108/AFR-08-2019-0094
Publisher
:Emerald Publishing Limited
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