An empirical analysis of rural farmers’ financing intention of inclusive finance in China. The moderating role of digital finance and social enterprise embeddedness
| Date | 12 August 2019 |
| DOI | https://doi.org/10.1108/IMDS-08-2018-0374 |
| Pages | 1535-1563 |
| Published date | 12 August 2019 |
| Author | Gulizhaer Aisaiti,Luhao Liu,Jiaping Xie,Jun Yang |
| Subject Matter | Information & knowledge management |
An empirical analysis of rural
farmers’financing intention of
inclusive finance in China
The moderating role of digital finance and
social enterprise embeddedness
Gulizhaer Aisaiti
School of Business Administration,
Xinjiang University of Finance and Economics, Urumqi, China
Luhao Liu
School of International Trade and Economics,
Shandong University of Finance and Economics,
Jinan, China
Jiaping Xie
College of Business,
Shanghai University of Finance and Economics, Shanghai, China and
School of Business Administration,
Xinjiang University of Finance and Economics, Urumqi, China, and
Jun Yang
School of Economics and Management,
Zhongyuan University of Technology, Zhengzhou, China
Abstract
Purpose –The purpose of this paper is to investigate and understand China’s rural farmers’financing
intention of inclusive finance, and it examines related drivers like knowledge of inclusive finance, perceived
benefits and perceived risks of ordering finance. Besides, the social enterprise embeddedness and digital
finance are integrated into the conceptual model to further investigate their moderating impact.
Design/methodology/approach –The authors designed an inclusive finance intention model to examine
the relations between dependent variable knowledge of inclusive finance, intermediary variables perceived
benefits and perceived risks of ordering finance and the independent variable financing intention of inclusive
finance. The embeddedness of social enterprise and digital finance were identified as modifying factors. Both
exploratory and conclusive research strategies were applied. A structured questionnaire was developed to
collect empirical data from the rural areas of China.
Findings –It suggests that knowledge of inclusive finance can strengthen both perceived benefits and
perceived risk of ordering finance. Interestingly, the embeddness of social enterprise can significantly reduce
risk perceptions and improve perceived benefits of ordering finance. Furthermore, perceived benefits of
ordering finance can positively enhance rural farmers’financing intention of inclusive finance, whereas
perceived risks can negatively influence the financing intention. Moreover, digital finance as a modifying
factor can significantly strengthen the positive correlation between perceived benefits of ordering finance and
financing intention of inclusive finance.
Practical implications –The research indicates that a systematic inclusive finance educational project is
needed to enhance rural farmers’understanding of inclusive finance and its components. Moreover, the study
reveals that it is crucial to promote social enterprise participation and digital finance to develop inclusive
finance in rural China, as the service attributes of social enterprise and efficiency of digital finance can greatly
reduce the existing transaction cost of farmers. Industrial Management & Data
Systems
Vol. 119 No. 7, 2019
pp. 1535-1563
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-08-2018-0374
Received 31 August 2018
Revised 29 October 2018
Accepted 11 December 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
The work was supported by National Social Science Foundation of China: Grant No. 15ZDB161, “Research
on the evolution of industry and enterprises in green whole industry chain”. The authors thank the editor
and the anonymous referees for comments and suggestions. The authors contributed equally to this work.
1535
Analysis of
rural farmers’
financing
intention
Originality/value –The conceptual model would potentially contribute to researchers interested in
investigatingthe financing intentionof inclusive financial servicesrelating to rural population.The integration
of social enterpriseembeddedness and digital finance isthe uniqueness of this research conceptual model.
Keywords Inclusive finance, Digital finance, Perceived benefits of ordering finance,
Perceived risks of ordering finance, Social enterprise embeddedness
Paper type Research paper
1. Introduction
Representing more than 20 percent of the world population, China is one of the fast growing
countries in terms of economy and political impact. However, still a majority of its rural
farmers have been suffering from poverty (WMFG, 2010). For decades, one of the most
popular ideas in the bottom of pyramid (BOP) literature is that poor people inevitably have
limited access to financial products and services (Sharif, 2000). The BOP market refers to a
market segmentation in which customers earn less than 1,500 dollar annual income
(Prahalad, 2010). It should be noted that BOP markets include many subdivisions, for
instance, poor rural communities, marginal farmers, landless laborers (Anderson et al.,
2010). In this sense, poor rural farmers can be categorized as a segment of the BOP market in
China. Such an assumption can be justified, as the majority of rural farmers suffering from
poverty and poor infrastructure and limited resources are quite common (Li et al., 2011).
Increasing numbers of organizations have become interested in the potential business
opportunities in the BOP market by designing products and services that exclusively serve
the poor customers ( Jebarajakirthy et al., 2015). One example is that the provision of
inclusive finance conveniently fulfills the financial needs of customers in the BOP markets
(Pitta et al., 2008). Inclusive finance refers to a type of finance model in which financial
institutions provide a range of quality financial services that can reach everyone, without
excluding the poor, disabled, rural population (Ashraf and Noor, 2010). Comparing with
traditional financial institutions, the major aim of inclusive financial institutions is to
improve the accessibility of affordable financial services to underserved consumers
(Varghese, 2001). Thus, inclusive finance is important for improving the living conditions
and eliminating the poverty of poor farmers, rural non-farm enterprises and other
vulnerable groups. Especially, rural farmers need financial access to improve agricultural
productions and further develop entrepreneurial activities in the rural areas.
However, the development of inclusive finance in rural China is full of various challenges
along with opportunities. Whether the new coming social enterprises, especially the
agricultural social enterprises, can play a significant role in terms of inclusive finance
development? Whether the application of digital finance can accelerate the process of
inclusive finance implementation? These underlined questions need to be answered by
researchers’in-depth investigation, and further effective measures need to be taken to
enhance the performance of inclusive finance poverty alleviation projects in China.
To elaborate the significant role of inclusive finance in China, it is crucial to explain the
rural financial system. In China, inclusive finance providers include rural credit cooperatives
(RCC), rural commercial banks, rural cooperative banks, village banks (VB), microcredit
companies, urban commercial banks, postal saving banks and agricultural social enterprises
(WMFG, 2010). Social enterprises like microcredit companies are the new players in rural
financial system (Tang, 2009). By contrast, informal lending is a very common way of
financing in rural China, which can further indicate the potential size of the market (Turvey
and Kong, 2010). However, the regional wealth disparity is still one of the si gnificant problems
considering the sustainability of national economic growth (Li et al., 2011). To shorten the
increasing wealth disparities, the central government has been providing the poor and rural
population financial access through RCC (Wang, 2004). Social enterprises like microcredit
companies also play a significant role in rural financial system. However, social enterprises
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