Financial Credits and Its Role in Rural Migration: A Case Study of Razavi Khorasan Province of Iran

Today, due to rural migration, agricultural activities in rural areas face problems such as labor shortages, aging of rural people and low productivity. In this regard, this study aimed at examining the effects of access to formal and informal financial credit on migration. To analyze the required data, the multilevel order logit model was used for 397 households from Razavi Khorasan province of Iran. The general results of the research showed that an  increase in access to financial credits above 200 million IR rials would lead to an increased probability of households being in the group of ‘high satisfaction with rural residence’ and a decreased probability of households being in the group of ‘low and medium satisfaction with rural residence’; in addition, households' access to informal loans would increase their probability of being in the group of ‘low and medium satisfaction with rural residence’ and decrease the probability of households being in the group of ‘high satisfaction with rural residence’. Based on the study findings, by expanding and granting the formal financial credits, policy makers can play an effective role in increasing the satisfaction of the rural people and reducing their willingness to rural migration.