Does financial support improve the economic effect of agricultural enterprises?

ABSTRACT

What types of agricultural enterprises should be supported by finance to improve the economic effect? The paper applies the panel data from Chinese agricultural enterprises from 2014 to 2019, and uses the Heckman two-stage method and fixed effects model to test the relationship between financial support and the economic effects of agricultural enterprises (AEs) from the perspectives of ‘who was supported’ and ‘who benefited’. The results showed that finance tended to support agricultural enterprises with large scale and low productivity; agricultural enterprises with specialized R&D institutions, state-owned and export enterprises are easier to receive financial support and the larger scale of financial support. Financial support improved the economic effect of agricultural enterprises. Heterogeneity analysis showed that financial support has a significant positive impact on agricultural enterprises sales revenue and total factor productivity in western, grain and private enterprises.

KEYWORDS:

• Financial support
• total factor productivity
• agricultural enterprises
• economic effects

JEL CLASSIFICATION:

• F36
• Q13
• Q14

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ The ordinary least squares (OLS) method is used to estimate TFP,$lnTF{P}_{it}=ln{Y}_{it}-\alpha ln{L}_{it}-\beta ln{K}_{it}-\gamma ln{\mathrm{M}}_{it}$. where $Y_{it}$, $K_{it}$, $L_{it}$, and $M_{it}$ represent the sales revenue, total assets, labour force, and raw material input of enterprise i in year t, respectively.

² This control variable concerns whether the enterprise is a state-owned enterprise, the industry’s category, and the region of the enterprise. There is almost no change between years, so there is no need to choose lagging variables.

Additional information

Funding

This work was supported by the The Agricultural Science and Technology Innovation Program.