The Relationship between Agricultural Credit, Regional Agricultural Growth, and Economic Development: The Role of Rural Commercial Banks in Jiangsu, China

This paper examines the relationship between different forms of agricultural credit, regional agricultural growth, and regional economic development. The sample we study consists of 51 rural commercial banks operating in Jiangsu Province, China. For analytical purposes, a random-effects (RE) model and the generalized method of moments (GMM) are employed to analyze agricultural credit’s relationship to regional agricultural and economic growth. Our results reveal that overall agricultural loans have a significant positive effect on both regional agricultural and economic growth. Furthermore, loans to farmers and rural enterprises also have a significant positive relationship to both regional agricultural and economic growth. Moreover, farmers’ microcredit loans and student loans, rural individual industrial and commercial household loans, and other types of loans to farmers also have a significant positive relationship to regional agricultural growth. The latter two types also have a significant positive relationship to regional economic growth. We conclude that promoting agricultural credit from rural commercial banks stimulates regional agricultural growth and overall economic development in Jiangsu Province.