PurposeIn the presence of credit rationing the poor are unable to exploit growth‐promoting opportunities. Using data gathered from a household survey on North China Plain, the purpose of this paper is to find pervasive rationing in the highly regulated formal credit market in rural China. The subsidized credit policies favor local elites instead of the targeted poor strata and earmarked credit programs are less effective. By jointly estimating credit rationing in both the formal and informal sectors, this paper elaborates on the fragmented rural credit market in China where different borrower segments are systematically sorted out across different loan types. Non‐targeted credit programs cannot address income redistribution or sustainable poverty reduction in the presence of such skewed equality and equity.Design/methodology/approachThe basis of this study is a multi‐topic household survey data on rural households in the North China Plain, with 337 rural households being randomly sampled out of five purposely selected counties. The particular objectives are to identify the determinants of credit rationing in both formal and informal sectors, to show the extent of credit rationing by using Probit model, to explore the substitutability of institutional and informal lending by using bivariate probit specification.FindingsFirst, there exists pervasive rationing in the highly regulated formal credit market in rural China. Second, the subsidized credit policies favor local elites, instead of the targeted poor strata; and the earmarked credit programs are less effective. Third, informal credits, in a form of reciprocal arrangement, are weak substitutes for institutional loans. Different segments of borrowers are systematically sorted out across different loan types; the rural credit market is fragmented. Fourth, government‐led credit programs are not effective in promoting agricultural investments; credits of rural non‐farm activities facilitate agricultural transformation.Originality/valueSince 2004, the policymakers in China initiated a set of policies towards promoting agricultural and rural development to spur the rural economy and ease tensions in rural area. Credit policies, believed often to be efficient and guided tools to provide financing to investors, gained a great deal of appeal. Given the widely existing failure of government‐driven rural credit programs in many other developing countries, how the interventions affect the rural economy in China should be investigated. However, little has been done to explore the interventions on smallholder farmers and the existing evidence is therefore pieced and anecdotal. This paper aims to fill that gap.

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Participatory and integrated research approaches employed by a long-term ThaiVietnamese-German collaborative research program, 'The Uplands Program', that address the vicious circles of resource scarcity, environmental degradation and rural poverty in mountainous regions of northern Thailand and northern Vietnam are discussed in this paper. We present two examples from the Thai component of the research program to show how different disciplines and stakeholders need to cooperate at different scales to make meaningful scientific contributions towards sustainable land use and rural development in mountainous regions. The case of resource conservation in the Thai highlands shows that local and scientific knowledge, conventional surveys and participatory modeling can be creatively combined. Integrated research on the potential of integrating fruit trees and associated technologies into mountain farming systems suggests that natural scientists have to work alongside economists and social scientists to avoid harmful effects of purely technology-driven and productivityenhancing approaches. The success of new technologies cannot be measured solely by adoption rates and yield increases, but also needs to take into account their long-term impact on various groups of farmers and the ecological, economic and social trade-offs that they entail. Technical and institutional innovations need to go hand in hand to provide viable livelihood opportunities for smallholder farmers in mountain watersheds. The major lesson learned from the first six years of our research in the mountains of Thailand and Vietnam is that conventional and participatory approaches are not antagonistic; if scientists from various disciplines and research paradigms are open-minded, the combination of both approaches can produce meaningful results that cater for the needs of both the academic community and local stakeholders in mountain environments.

In the context of Romania's macroeconomic and agricultural transformation, this paper analyses the current extent of the depth of rural finance and discusses the implications for the future development of rural financial markets in Romania. The overall agricultural support system is reviewed with particular emphasis on mechanisms of rural finance. The paper argues that building an efficient rural finance system that addresses the financial needs of private sector agriculture and the rural clientele requires a multi-level approach: Innovations are needed at the finance system level, involving, in particular, the creation of an effective regulatory and supervisory framework and making the National Bank of Romania (the central bank) independent of Government interference, at the level of financial organisations, in the processing and administration of financial services and in product design.

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