Nexus between government agricultural expenditures and agricultural credit: The role of sustainable agricultural growth and sustainable agricultural income

Abstract This study aims to analyze the effects of fiscal expenditures by the government on agricultural credit by considering the mediating role of sustainable agricultural growth and sustainable agricultural income. This study uses panel data from 31 Chinese provinces for the period 2009–2021. For in‐depth analysis, the sample is divided into different regions ‐ eastern, central, and western. For the empirical estimations, the ordinary least squares (OL), fixed effect (FE), random effect (RE), two‐way fixed effect (FE), and two‐stage least‐squares (2SLS) methods are employed. The results of the study demonstrate a significantly positive connection between governmental agricultural expenditures (GAEs) and agricultural credit (AC). The findings of the mediation analysis highlight a significantly positive mediating role of sustainable agricultural income in the association between GAEs and AC. The results of the regional analysis reveal a positive connection between GAEs and AC in all regions. It is recommended that government should increase its investment in the agriculture sector through both direct and indirect means of fiscal support, it can improve the agricultural income of farmers at a sustainable level and the repayment ability of farmers and rural households, and it can make their easy access to AC from banks and other financial institutions.