Credit Market and Microcredit Services in Rural China

Mohamad Revindo () and Christopher Gan

Chapter 4 in Microfinance in Asia, 2017, pp 93-146 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Gap in credit access to rural poor population in China exists because rural households, especially farmers, are constrained to access credit from formal Rural Financial Institutions (RFIs). The risky nature of agriculture business and the absence of land ownership due to China’s village-based communal land-tenure system hinder the farmers from accessing formal credit requiring collateral and force them to resort to informal borrowings that charge exorbitant interest rates. The subsidisedloan programme implemented by the Chinese government in 1986–2000 failed to reduce the credit access gap because it was poorly managed, missed the target borrowers (poor rural households) and was financially unsustainable due to the low repayment rate. Microcredit programme was then introduced in 1994 to bring more effective and sustainable rural poverty eradication. This chapter provides an overview of the rural financial system, rural credit market and the development of microcredit in China. The chapter concludes that microcredit may significantly reduce the gap in the rural credit market and play an important role in rural poverty alleviation provided some reforms are implemented both at RFIs as well as national policy making levels.

Keywords: Microfinance; Poverty Alleviation; Rural Credit; Asia; Grameen Bank (search for similar items in EconPapers)
JEL-codes: F30 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789813147959_0004 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789813147959_0004 (text/html)
Ebook Access is available upon purchase.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789813147959_0004

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().