Impact of financial literacy on Credit Availability of farmers in Jiangsu Province China: A mediation effect of risk attitudes

Abstract

The level of financial literacy of farmers is an important condition for determining whether their credit needs can be effectively met. The objectives of this study are to explore the rural credit model in China, to understand the credit needs of farmers, to improve the existing credit constraints in rural areas, to increase the availability of credit to farmers, to promote the development of rural finance, and to better serve the production and life of farmers .Based on this, this study, on the basis of combing the literature, establishes a theoretical model to explore in-depth the mechanism of the influence of financial literacy of rural households on their level of access to credit in Jiangsu, China, based on the perspective of the mediating effect of the risk attitudes of rural households. The result of the study shows that, firstly, financial literacy has a significant effect on risk attitude and credit availability. Secondly, the effect of risk attitude on credit availability is significant. Thirdly, risk attitude plays a partially mediating effect in the impact of financial literacy on credit availability, i.e., the higher the level of financial literacy, the more risk-averse the farmers are and thus more likely to choose formal credit.