Estimating the impact of poverty alleviation microcredit on the income of poor households using the propensity score matching method: Evidence from China

Abstract

The poverty alleviation microcredit policy is an important financial poverty alleviation policy that has been widely implemented in China in recent years. However, whether this policy can effectively increase the income of poor households is controversial. In order to measure the implementation effect of the policy, we analyzed the mechanism of the poverty alleviation microcredit on the income of poor households. Then, the paper used micro-survey data to conduct an empirical test using the propensity score matching method to study its effect on the production income of these poor households. The results show that the poverty alleviation microcredit positively affects the production income of poor households, including those who are poor due to lack of funds and poor households with female heads. Therefore, we should continue to implement the poverty alleviation microcredit policy, and establish relevant supporting measures, such as strengthening agricultural production capital subsidies, increasing agricultural production insurance, further improving the implementation efficiency of the poverty alleviation microcredit policy, and increasing the income of poor households.