Many studies have shown that credit constraints have a significant negative impact on farmers' objective welfare such as income and consumption. However, few studies have dealt with the impact of credit constraints on farmers' subjective welfare. Credit constraints may not only affect the subjective poverty of farmers in economy but also psychologically affect the subjective poverty of farmers. Based on the rural household samples in the China Household Income Projects (CHIP2013) database, we analyze the impact of credit constraints on subjective poverty of farmers. To minimize the bias, we use the propensity score matching (PSM) method to control the non-randomness of farmers' credit constraints. To ensure robust results, we also divide the sample into different sub-samples based on farmer's income and family size, and verify again the impact of credit constraints on farmers' subjective poverty. The results are as follows. Firstly, compared with the farmers without credit constraints, the probability of subjective poverty among farmers with credit constraints is significantly increased. Secondly, formal credit constraints have a significant effect on farmers' subjective poverty expressed by minimum income and by income evaluation. However, informal credit constraints have a significant effect on the subjective well-being of farmers. Therefore, the economic effect of formal credit constraints is more significant and the psychological effect of informal credit constraints is more significant. Thirdly, although demand-based credit constraints are the main type of credit constraints to which farmers are subject, supply-based credit constraints still have a larger impact on farmers' subjective poverty. Therefore, to strengthen the inclusiveness of rural finance is still the key to improving farmers' welfare.

farmer  /  credit constraints  /  subjective poverty  /  household income