"Greasing the wheels of development: rural credit in China" in Politics and Markets in Rural China, edited by Bjorn Alpermann (2011) (original) (raw)
Related papers
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.
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.
Problems of China's Rural Financial System
There are three different kinds of rural financial institutions in China: com- mercial banks - Agricultural Bank of China (ABC); a policy-based bank - Agricultural Development Bank of China (ADBC); and many co-operative financial institutions with well-developed village networks - Rural Credit Co-operatives (RCCs). Although there are many rural financial institutions in China, most of the farmers can only obtain loans through informal channels, especially from loan sharks. Obviously China's rural financial system does not work well. The two major problems of the system are: substantial depos- its of farmers flowing out into urban areas; and formal financial institutions denying loans to poor rural households usually because they lack collateral and are faced with a riskier environment. Some suggestions for the reform on rural financial system are put forward here: to reinforce the agriculture- supporting role of the policy-based finance; to retain enough commercial finance in r...
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.
China has put in place a government-organised programme of credit for farmers. Despite this, a very large number of farmers are caught without any access to loans to purchase the agricultural inputs they need. For many, this lack of credit is one of the major factors that keep them trapped in poverty. In light of this, the government agency responsible for poverty alleviation has sponsored an additional credit programme that provides a type of Grameen Bank microcredit. Yet this is not well suited to poor villages that rely upon agriculture.
Pacific Affairs, 2009
ABSTRACT Although the Rural Credit Cooperatives are the only formal credit providers to millions of households in rural China, empirical evidence suggests that they do not serve the interests of member households very effectively. This study examines how far the recent institutional reforms have addressed the problems of insider control and collective action in corporate governance and reduced local political influence on their operations. It contributes to the currently scant literature on the reasons for the persistence in China of local political interference in loan allocations. This study's findings suggest that the role of the local states in the country's economic development is far less positive than is perceived by the conventional wisdom.
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.
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.
Journal of East Asian Studies, 2006
Ample empirical evidence suggests that Rural Credit Cooperatives (RCCs), which are the core credit institutions in rural China, are not accountable to their member households. This article argues that this conundrum can be explained by an institutional analysis of the credit cooperatives using the multiple principals–agent framework: the credit cooperatives as agents are accountable to multiple heterogeneous principals—with multiple conflicting objectives. The multiple principals are (1) the County RCC Unions, which exercise control using the evaluation criteria on which the remuneration of grassroots RCC officers is assessed; (2) local party secretaries, who exert influence through top personnel appointment and dismissal in the credit cooperatives; and (3) member households, which are a “collective” principal. In a multiple-principals scenario, the “collective” principal has weaker control over the agents due to the “collective action” problem.