The Impact of Farmland Management Rights Mortgage Loan on the Agri-Food Industrial Agglomeration: Case of Hubei Province

Abstract

The Chinese government encourages rural economic entities to use farmland management rights as collateral for loans, which helps to alleviate multi-level financing needs in rural areas. Based on the panel data of counties in Hubei Province, this paper adopts the Difference-in-Differences (DID) and the intermediary effect model to evaluate the impact of farmland management rights mortgage loans (FMRML) on the agri-food industrial agglomeration (AIA) in China. The study found that the pilot policy has significantly promoted the AIA. Moreover, the regression results remain robust after conducting the placebo test and the Propensity Score Matching Difference-in-Differences (PSM-DID) model, which demonstrates that the improvement effect is stable and long-lasting. From the heterogeneity analysis, it can be seen that the policy of FMRML has a more significant effect on the AIA in mountainous and hilly areas. By further analysis of the mechanism of action, it can be concluded that the pilot policy promotes the AIA by enhancing agricultural specialized production. The main findings can provide information for policymakers in China. The recommendations we have summarized encompass gradually expanding the scope of the pilot policy of FMRML, advancing the institutionalization and legalization of the policy, and promoting agricultural production specialization.

Keywords

• agri-food industrial agglomeration
• farmland management rights mortgage loan
• difference-in-differences method
• quasi-natural experiment