Financial Support for Rural Entrepreneurship: Alleviating Constraints, Mitigating Risk, and Expanding Investment—Evidence from 2109 Rural Households in China

Rural entrepreneurship is a key driver of rural economic development. However, limited evidence indicates how financial support affects rural households’ entrepreneurship through integrated mechanisms. Using 2109 micro-survey data points from rural Henan Province, Probit and OLS models were used to examine the impacts, moderating effects, and mediating pathways of formal and informal finance on rural households’ entrepreneurial decision-making and performance. This study makes two contributions. First, it differentiates entrepreneurial decision-making and performance as two stages of the entrepreneurial process. Second, it proposes an integrated three-path framework incorporating one moderating effect (the interaction between financial support and financing constraints) alongside two mediating mechanisms (risk-taking willingness and investment scale), which enables a more refined interpretation of the heterogeneous impacts exerted by financial support throughout distinct entrepreneurial stages. Both formal and informal finance can positively facilitate entrepreneurial decision-making, with formal support having stronger marginal effects. Financial support has varied impacts on rural household entrepreneurship, depending on household income, entrepreneurship type, and region. By alleviating financing constraints and optimizing resource allocation, financial support improves rural households’ entrepreneurial probability and business performance. By enhancing households’ risk-taking willingness and expanding asset investment, this support injects endogenous impetus into rural development. This financial empowerment mechanism can remove entrepreneurship barriers, facilitate the expansion of opportunity-based entrepreneurship, drive rural economic resilience, and promote inclusive, sustainable regional development.