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Village banks which are founded in 2007 are increasingly important in promoting the economy of rural areas in China, but the knowledge about the interest rate of small credit is partial and contested due to the deficiency of empirical material. This paper reviews the researches of interest rate of small credit, and then analyzes the interest rate of small credit of the sample village banks by adopting the break-even model and Rosenberg model. Being commercial small credit institutions, village banks should achieve financial sustainability. Therefore, it is necessary for village banks to charge its borrowers a high interest rate for a general loan, and then there is enough interest income which can compensate the management fee, capital cost and expense incurred by the lending.

It is thought that high interest rate should be carried out by small credit institutions to meet the demand of local farmers and maintain sustainable development. This paper analyses the interest rate elasticity of demand about small credit in the rural area in Guizhou. The result reveals that farmers are sensitive to the interest rate and the high interest rate is not possibly accepted by them. The view of high interest rate is only from the perspective of the small credit suppliers and the demanders are neglected. It is verified that increasing or decreasing artificially the interest rate is not rational. The interest rate should be determined by game between suppliers and demanders in the credit market. Understanding the influence of interest rate elasticity is the key to strengthen the service of small credit institutions.

This paper explores the strategic dimensions of R&D decisions toward novelty and openness in explaining the performance of latecomer firms in a developing economy. A structural equation model of R&D decision-making is formulated using survey data from 50 Chinese firms. The dimension of R&D novelty is defined as the degree of technological newness found in firms' R&D projects, while R&D openness describes the degree to which technologies are acquired from external sources. Our results indicate that firms' R&D decisions regarding novelty and openness are associated with demand opportunities, market competition, technological capability, and external networks. Greater R&D novelty contributes positively to innovative output but does not affect sales growth. Greater R&D openness contributes positively to sales growth but negatively to innovative output.