Abstract: Risk shocks remain a major driver of recurrent poverty in rural China even after the achievement of poverty eradication. Using survey data from 926 rural households in Shaanxi province, this article employs ordinary least squares (OLS) regression, interaction terms and mediation analysis to examine how natural and market risks affect rural household income. The results show that both types of risk significantly reduce income, while in situ urbanisation helps to mitigate these adverse effects. Financial behaviour, including maintaining insurance, savings and access to credit, plays a mediating role in households’ ability to cope with risk shocks. To examine these aspects more closely, the article also constructs a micro-level financial behaviour index and provides policy implications for raising income and consolidating poverty-alleviation gains through inclusive finance and in situ urbanisation.
Zhang et al. (Sun,) studied this question.