Does Borrowing Mitigate Livelihood Vulnerability? Evidence from Pastoral Households in Xinjiang, China

Global climate change challenges pastoral livelihoods in arid and semi-arid areas, and financial exclusion has further weakened their ability to adapt to environmental and economic shocks. This study focuses on the survey data of 650 households in Xinjiang, China, based on the “exposure-sensitivity-adaptive capacity” framework, and the endogenous switching regression was employed to analyze whether household borrowing mitigates livelihood vulnerability. Results reveal that borrowing significantly mitigates livelihood vulnerability, reducing the index by approximately 14.84%; And borrowing exhibits a “pro-poor” effect, and its mitigation effect is enhanced with the improvement of the vulnerability level of pastoralists. The study recommends innovating the integration model of “an integrated model combining credit, insurance, and industrial support” and establishing a differentiated credit support system for highly vulnerable groups to reduce the livelihood vulnerability of pastoral households.