Agricultural reforms and bridging the gap for rural China

Abstract

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Factors affecting Chinese farmers’ microcredit participation

“…Development of a standardized farmer credit evaluation system is supported by this work and the literature (e.g. Turvey et al, 2014;Westmore, 2015). If well designed and credible, such a system will reduce transaction costs and risk for those offering microcredit loans, and may serve to mitigate the need for other traditional mechanisms such as multi-household guarantees.…”

“…Relatively direct options available to the government include relaxing regulatory constraints and reducing the cost burden to lenders such as through tax-relief and loan subsidies (see also Westmore, 2015;Tan, 2014;Xiang et al, 2014). The government can also directly work to refine and then put in place a system to clearly articulate domestic standards for microcredit, and to ensure there exists a formal supervisory mechanism.…”

“…Both formal and informal financiers have been reluctant to expand their offerings in rural areas because of higher risk, weak profits, a short lifecycle for agricultural loans, and relatively high transaction costs (Tan, 2014;Jia et al, 2015;Kong et al, 2015;Westmore, 2015). Also important is a lack of collateral as, by law, land cannot be mortgaged in China (Westmore, 2015).…”