Can Agricultural Insurance Promote Agricultural Modernization?—Evidence from China During 2008–2023

Agricultural insurance, as a stabilizer, is crucial for the promotion of agricultural modernization. Therefore, exploring the impact mechanism of agricultural insurance on agricultural modernization and seeking ways to promote it has important practical significance. This study uses China’s provincial panel data from 2008 to 2023 to empirically analyze the direct effect of agricultural insurance on agricultural modernization. The mediation effect, spatial Durbin, and threshold models are used to further explore the internal mechanism of agricultural insurance on agricultural modernization. Results reveal that (1) agricultural insurance plays a significant role in promoting agricultural modernization, with its robustness verified across various models and endogeneity tests. (2) Agricultural insurance can promote agricultural modernization effectively by expanding the scale of agricultural operations, increasing agricultural capital input, enhancing agricultural technology input, and promoting green agricultural production. (3) Agricultural insurance has a positive spatial spillover effect on the development of agricultural modernization in neighboring provinces. Furthermore, there is a threshold effect of agricultural insurance in promoting agricultural modernization, showing stronger effects in rural areas where the human capital level exceeds the single threshold or where the economic development level falls between the single and triple thresholds. (4) Heterogeneity analysis reveals that agricultural insurance exerts stronger promotional effects on agricultural modernization in non-grain-producing regions, in eastern and central areas, and during the initial stages of insurance development. The study proposes recommendations such as the differentiated promotion of agricultural insurance, enhancing the directionality of agricultural insurance policies, and improving the linkage mechanism between agricultural insurance and credit.