Problems of China's Rural Financial System (original) (raw)
Related papers
Research on Rural Financing in China with Reference to Village and Township Banks.pdf
International Journal of Business and Management, 2013
The problem of rural financing is one of the major challenges to the emerging China. It is challenging for government authorities to provide adequate financial resources and access to financial institutions in rural agricultural areas to farmer households. The development of Village and Township Banks (VTBs) has remarkably increased since 2008 but the deposit collection of VTBs is comparatively weaker than the loan disbursement. Despite of facing numerous challenges, establishing within the framework of new-type financial institutions is playing a significant role for the development of agricultural sector. For the sustainable development of VTBs, VTBs should set up staff and member incentive system, introduce innovative financial products; and strengthen the agricultural insurance system. The cooperation between VTBs and the other rural financial institutions should be developed to meet short-term rural financing gap and to strengthen the institutional capacity of VTBs. The government’s support in policy formulation and financial assistance is essential and the local government intervention should be discouraged. An autonomously functioning financial institution can enhance the sustainable development of rural households’ income, in particular, and the agricultural sector, in general.
Rural Financial Reform in China: Progress Made and the Path Forward
The Copenhagen Journal of Asian Studies
Significant progress has been made in reforming China's rural financial system. Nevertheless, the current institutions are unable to meet the multilayered and diversified demands for rural financial services. Establishing a comprehensive and efficient rural credit system to support the dynamic commercial sector of the rural economy, small-scale farming and small and medium-size enterprises is the major challenge in China. This article identifies bottlenecks and suggests policies to develop a well-functioning and sustainable agricultural and rural financial system that would address the diverse needs of the rural and agriculture sectors. To preview the policy recommendations, attention should be given first to legislation and supervision, and then to the corporate governance structure of financial institutions.
Rural Banking in China: Geographically Accessible but still Financially Excluded
Based on the distribution patterns of rural credit cooperatives in about 2,200 counties in 2009, this paper examines two aspects of financial exclusion in rural China after the restructuring of the banking industry. Despite the state's efforts to ensure financial inclusion in rural areas, poor farmers could be spatially included while still being denied loans due to their inability to provide collateral, and the lack of formal credit records. The mismatch between the supply and demand of credit has led to informal loans substituting for formal loans and thus contributing to the proliferation of informal banking in China.
Politics and Markets in Rural China, 2011
The objectives of this book chapter are twofold. First, it aims to provide a pre´cis of the rural credit sector and recent institutional changes. Second, by drawing on the author’s household survey data, it provides in-depth analyses of the RCCs, the most prevalent rural credit institutions in China. The survey investigates why farmers become RCC members, why they bank with RCCs, their perceptions of loan conditions, and their uses of formal and informal loans. The household survey consisting of 277 respondents was conducted during 2004–06 in seven townships across three provinces—Shandong, Hebei, and Sichuan. Aside from the survey, this chapter also draws upon the author’s numerous field interviews with bank officers and local officials throughout rural China.
2018
This study attempt to empirically investigate the rural banking and its impact on farmers in China, with much focus on the farmers in JintangSichuan province of China. Research questionnaires weredevelopedand distributed to a sample of 760 farmers and 3 different banks in Jintang. Evidentially from the findings of the study indicates that although the various rural banks in China particularly that of Jintang County are willing to support the farmers with credit facilities, farmers refuse to access the loan because they believe that much information asymmetry with the banks. Regression and SPSS software analysis was the major statistical tool used toanalyzethedatacollectedfrom the ruralbanks and farmers in Jintang were used for the analysis.
Rural financial markets in low-income countries: Recent controversies and lessons
World Development, 1986
Recently some researchers have criticized traditional agricultural credit policies in low-income countries. This article identifies the major points of controversy between traditional views and these new views and also summarizes the primary lessons learned from these controversies. Savings mobilization, more flexible interest rate policies, less loan targeting, and greater emphasis on improving the quality of financial services in rural areas are new views that are emphasized.
2012
The official banking institutions for rural China are Rural Credit Cooperatives (RCCs). Although these co-ops are mandated to support agricultural development among farm households, since 1980 half of RCC loans have gone to small and medium-sized industrial enterprises located in, and managed by, townships and villages. These township and village enterprises have experienced highly uneven levels of success, and by the end of the 1990s, half of all RCC loans were in or close to default, forcing China's central bank to bail out RCCs. In Prosper or Perish, Lynette H. Ong examines the bias in RCC lending patterns, focusing on why the mobilization of rural savings has contributed to successful industrial development in some locales but not in others. Interweaving insightful and theoretically informed discussions of rural credit, development, governance, and bank bailouts, Ong identifies various sources for China's uneven development. In the highly decentralized fiscal environment of the People's Republic, successful industrialization has significant implications for rural governance. Local governments depend on revenue from industrial output to provide public goods and services; unsuccessful enterprises starve local governments of revenue and result in radical cutbacks in services. High peasant burdens, land takings without adequate compensation by local governments, and other poor governance practices tend to be associated with unsuccessful industrialization. In light of the recent liberalization of the rural credit sector in China, Prosper or Perish makes a significant contribution to debates within political science, economic development, and international banking.
Credit in Rural China: Why is It Hard to Get, and How to Make It More Available
2021
Agricultural development and social welfare in rural areas is directly affected by the availability of credit. This paper is examines the rural households' explicit and implicit demand for credit and empirically investigates the credit rationing that occurred in China. Five different types of credit rationing were investigated that affected 52.16 per cent of sampled households. Respondents' wealth characteristics and risk reducing strategies including insurance and involvement in farm cooperatives appears to be effective in reducing their exposure to credit rationing.