Premium
Liquidity Constraints and Postharvest Selling Behavior: Evidence from C hina's Maize Farmers
Author(s) -
Sun Dingqiang,
Qiu Huanguang,
Bai Junfei,
Liu Haiyan,
Lin Guanghua,
Rozelle Scott
Publication year - 2013
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/deve.12018
Subject(s) - market liquidity , endogeneity , arbitrage , debt , commodity , constraint (computer aided design) , economics , postharvest , business , monetary economics , financial economics , finance , horticulture , biology , mechanical engineering , econometrics , engineering
This paper addresses the impacts of liquidity constraints on household postharvest commodity selling behavior. Using data collected from C hina's maize farmers, we find that households with debt, in general, sell their maize much earlier than debt‐free households, thus potentially losing inter‐temporal arbitrage opportunities. Segmenting our sample into wealthy and poor households, we find that the relationship between a liquidity constraint and postharvest sales is apparent only among poor households. Using the occurrence of an illness in children or an elderly household member as an instrument for liquidity, we control for potential endogeneity associated with liquidity. We find that poor households in which there were children or elderly people with sicknesses in previous years are more likely to sell maize early than other poor households.