How does targeted microcredit empower the economic resilience of rural households in the context of natural disasters?

Introduction The adverse impacts of natural disaster shocks threaten the sustainable development of agricultural production and exacerbate the risk of rural households returning to poverty. As a financial tool designed to support the development and production of rural households in China, the role of targeted microcredit on the economic resilience of poverty-eradicating households facing natural disaster shocks is a critical issue worthy of attention in the new era after the poverty elimination campaign. Methods Based on the three periods of balanced panel data from field tracking surveys conducted in China’s Liupan Mountains contiguous poverty area from 2021 to 2023, this study employs the multi-period difference-in-differences (DID) model to assess the effects of targeted microcredit on the economic resilience of poverty-eradicating households. Results The findings show the following: firstly, targeted microcredit significantly improves the economic resilience of poverty-eradicating households. The dynamic results suggest that the empowering effect of targeted microcredit strengthens over time. Secondly, targeted microcredit enhances the households’ economic resilience primarily by increasing operational income and human capital. Thirdly, the heterogeneity analysis demonstrates that the empowering effect of targeted microcredit on the households’ economic resilience is more pronounced among households engaged in agriculture-oriented livelihoods and stable poverty-eradicating status. Discussion Therefore, it is crucial to integrate various resources to innovate and develop targeted microcredit programs, stimulate the endogenous development momentum of poverty-eradicating households, thereby enhancing their economic resilience.