The impact of policy-based agricultural insurance on agricultural entrepreneurship

Amid the continuous development of rural revitalization and agricultural modernization, agricultural entrepreneurship is now a vital way to promote the high-quality agriculture’s development of and improve the income of farmers. Nevertheless, the dynamism of agricultural entrepreneurship is limited by compounded uncertainties from natural and market risks. In this context, this study utilizes the panel data from provinces in China from 2014 to 2023 to systematically examine the impact of policy-based agricultural insurance (PBAI) on agricultural entrepreneurial activity. Additionally, it investigates the mediating effect of inclusive finance and the heterogeneous effects between regions and periods. The results show three major findings. First, PBAI has a substantial impact on agricultural entrepreneurship and this effect is robust across a series of robustness checks, including sample scope and winsorization treatments. Second, the mediating effect analysis indicates that PBAI has a significant positive impact on regional inclusive financial development, which in turn has a positive role in stimulating agricultural entrepreneurial activity, indicating that inclusive finance partially mediates the relation between entrepreneurship and agricultural insurance. Third, heterogeneity analysis shows the positive effect of PBAI on agricultural entrepreneurship is significantly robust in the western and central regions than in the eastern region and is more pronounced in non-pandemic periods than during the periods affected by the shock of the Covid-19 pandemic. These findings enlarge the knowledge of the economic impacts of PBAI from the standpoint of agricultural entrepreneurship and offer specific policy recommendations on how to enhance agricultural risk protection systems and support entrepreneurial activities in rural areas.