Abstract: Based on transaction cost theory, the impact of regional rule of law changes on the access to credit capital and welfare level of rural households was discussed by using the data of China’s Provincial Marketability Index Report and China Household Finance Survey in 2015. Research shows that improving the regional rule of law can alleviate credit constraints of farmers and improve the availability of credit. At the same time, the improvement of regional rule of law can improve the income level of farmers through direct effect and indirect effect, and the direct effect is greater than the indirect effect through the credit channel. The heterogeneity analysis shows that the improvement of regional rule of law can directly improve the welfare level of small farmers, and indirectly improve the welfare level of big farmers through credit channel. In this regard, relevant departments should pay attention to improving the construction of rural legal system, improve the efficiency of law and regulation enforcement, cultivate farmers’ legal awareness, and realize the benign interaction between property rights protection and financial development.