Social Capital and Financial Capital in Chinese Cooperatives

Liyan Yu and Jerker Nilsson
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Liyan Yu: College of Economics, Fujian Agriculture and Forestry University, Fuzhou 350002, China
Jerker Nilsson: Department of Economics, Swedish University of Agricultural Sciences, SE-750 07 Uppsala, Sweden

Sustainability, 2019, vol. 11, issue 8, 1-15

Abstract: For the rural districts of China to get an economically and socially sustainable development, the strengthening of agricultural cooperatives is essential. This study aims at presenting a model about how social capital within the cooperatives can be converted into financial capital to the benefit of both the cooperative and the members. Case studies of four cooperatives serve as illustrations. There is a large amount of social capital in these cooperatives, with their operations simple enough to allow members to be involved. The supplying members (common members) are few and well acquainted with one another. They have close relationships with those individuals (core members) who have the dominating ownership and who run the cooperatives. These case cooperatives were chosen because they have innovative financial solutions. For example, members let their private assets and those of the cooperative constitute joint collateral when money is borrowed from financial institutions. In another case, the members trust each other sufficiently for there to be a mutual fund that lends money both to members and their cooperative. Yet another model involves members having low demands concerning capital returns when lending to their cooperative.

Keywords: cooperatives; capital constraint; social capital; financial capital (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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