IDEAS home Printed from https://ideas.repec.org/a/bap/journl/140205.html
   My bibliography  Save this article

Household Access to Nongovernmental Microfinance, Formal Credit and Informal Credit in Rural China

Author

Listed:
  • Hao Luan

    (Center for Chinese Agricultural Policy, Chinese Academy of Sciences, China)

  • Xiangping Jia

    (Center for Chinese Agricultural Policy, Chinese Academy of Sciences, China)

  • Jikun Huang

    (Center for Chinese Agricultural Policy, Chinese Academy of Sciences, China)

Abstract

There has been a rising concern that microfinance is abandoning its mission to serve the poor. Based on a longitudinal dataset, this paper examines rural households¡¯ credit access to all the sources in less developed areas in China, and analyzes its relationship with household wealth. It is found that nongovernmental microfinance has expanded rapidly by serving a mixture of poor and wealthy clients. Meanwhile, formal financial institutions have gradually reduced their loan services in poor areas and have targeted more on the wealthy. In the presence of a large unmet demand for credit in rural China, informal network became the primary source of credit to smallholders.

Suggested Citation

  • Hao Luan & Xiangping Jia & Jikun Huang, 2014. "Household Access to Nongovernmental Microfinance, Formal Credit and Informal Credit in Rural China," Review of Economics & Finance, Better Advances Press, Canada, vol. 4, pages 61-76, May.
    • Handle: RePEc:bap:journl:140205
    as

    Download full text from publisher

    File URL: http://www.bapress.ca/ref/v4-2/1923-7529-2014-02-61-16.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sharma, Manohar, 2000. "Microfinance," MP05 briefs 0, International Food Policy Research Institute (IFPRI).
    2. Toshio Kondo & Aniceto Orbeta Jr. & Clarence Dingcong & Christine Infantado, 2008. "Impact of Microfinance on Rural Households in the Philippines," Development Economics Working Papers 22639, East Asian Bureau of Economic Research.
    3. Pei Guo & Xiangping Jia, 2009. "The structure and reform of rural finance in China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 1(2), pages 212-226, January.
    4. Carla Henry & Manohar Sharma & Cecile Lapenu & Manfred Zeller, 2003. "Microfinance Poverty Assessment Tool," World Bank Publications - Books, The World Bank Group, number 15065, December.
    5. Kazushi TAKAHASHI & Takayuki HIGASHIKATA & Kazunari TSUKADA, 2010. "The Short‐Term Poverty Impact Of Small‐Scale, Collateral‐Free Microcredit In Indonesia: A Matching Estimator Approach," The Developing Economies, Institute of Developing Economies, vol. 48(1), pages 128-155, March.
    6. McIntosh, Craig & Villaran, Gonzalo & Wydick, Bruce, 2011. "Microfinance and Home Improvement: Using Retrospective Panel Data to Measure Program Effects on Fundamental Events," World Development, Elsevier, vol. 39(6), pages 922-937, June.
    7. Conning, Jonathan & Udry, Christopher, 2007. "Rural Financial Markets in Developing Countries," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 56, pages 2857-2908, Elsevier.
    8. Yaron, Jacob, 1994. "What Makes Rural Finance Institutions Successful?," The World Bank Research Observer, World Bank, vol. 9(1), pages 49-70, January.
    9. Turvey, Calum G. & Kong, Rong, 2010. "Informal lending amongst friends and relatives: Can microcredit compete in rural China?," China Economic Review, Elsevier, vol. 21(4), pages 544-556, December.
    10. Xiangping Jia & Franz Heidhues & Manfred Zeller, 2010. "Credit rationing of rural households in China," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(1), pages 37-54, May.
    11. Robert Cull & Asli Demirgüç-Kunt & Jonathan Morduch, 2009. "Microfinance Meets the Market," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 167-192, Winter.
    12. Park, Albert & Ren, Changqing, 2001. "Microfinance with Chinese Characteristics," World Development, Elsevier, vol. 29(1), pages 39-62, January.
    13. Coleman, Brett E., 2006. "Microfinance in Northeast Thailand: Who benefits and how much?," World Development, Elsevier, vol. 34(9), pages 1612-1638, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jia, Xiangping & Cull, Robert & Guo, Pei & Ma, Tao, 2016. "Commercialization and mission drift: Evidence from a large Chinese microfinance institution," China Economic Review, Elsevier, vol. 40(C), pages 17-32.
    2. Jia, Xiangping & Xiang, Cheng & Huang, Jikun, 2013. "Microfinance, self-employment, and entrepreneurs in less developed areas of rural China," China Economic Review, Elsevier, vol. 27(C), pages 94-103.
    3. Liqiong Lin & Weizhuo Wang & Christopher Gan & David A. Cohen & Quang T.T Nguyen, 2019. "Rural Credit Constraint and Informal Rural Credit Accessibility in China," Sustainability, MDPI, vol. 11(7), pages 1-20, April.
    4. Hisaki KONO & Kazushi TAKAHASHI, 2010. "Microfinance Revolution: Its Effects, Innovations, And Challenges," The Developing Economies, Institute of Developing Economies, vol. 48(1), pages 15-73, March.
    5. Dufhues, Thomas & Buchenrieder, Gertrud, 2005. "Outreach of credit institutes and households' access constraints to formal credit in Northern Vietnam," Research in Development Economics and Policy (Discussion Paper Series) 8535, Universitaet Hohenheim, Department of Agricultural Economics and Social Sciences in the Tropics and Subtropics.
    6. Wittawat Hemtanon & Christopher Gan, 2020. "Microfinance Participation in Thailand," JRFM, MDPI, vol. 13(6), pages 1-27, June.
    7. Akotey, Joseph Oscar & Adjasi, Charles K.D., 2016. "Does Microcredit Increase Household Welfare in the Absence of Microinsurance?," World Development, Elsevier, vol. 77(C), pages 380-394.
    8. Meishan Jiang & Krishna P. Paudel & Seydina O. Sene, 2022. "Does counter‐guarantee affect microcredit mechanism's performance on repayment? Evidence from Guangzhou, China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 1807-1817, April.
    9. Liqiong Lin & Weizhuo Wang & Christopher Gan & Quang T. T. Nguyen, 2019. "Credit Constraints on Farm Household Welfare in Rural China: Evidence from Fujian Province," Sustainability, MDPI, vol. 11(11), pages 1-19, June.
    10. Hudon, Marek & Périlleux, Anaïs, 2014. "Surplus distribution and characteristics of social enterprises: Evidence from microfinance," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(2), pages 147-157.
    11. Jianmei ZHAO & Jun ZHANG & Peter J. BARRY, 2014. "Do formal credit constraints affect the rural household consumption in China?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 60(10), pages 458-468.
    12. Muriithi, Beatrice W. & Matz, Julia Anna, 2015. "Welfare effects of vegetable commercialization: Evidence from smallholder producers in Kenya," Food Policy, Elsevier, vol. 50(C), pages 80-91.
    13. Rajbanshi, Ram & Huang, Meng & Wydick, Bruce, 2015. "Measuring Microfinance: Assessing the Conflict between Practitioners and Researchers with Evidence from Nepal," World Development, Elsevier, vol. 68(C), pages 30-47.
    14. Gutiérrez-Nieto, Begoña & Serrano-Cinca, Carlos, 2019. "20 years of research in microfinance: An information management approach," International Journal of Information Management, Elsevier, vol. 47(C), pages 183-197.
    15. Janda, Karel & Zetek, Pavel, 2014. "Mikrofinanční Revoluce: Aktuální Kontroverze A Výzvy [Microfinance Revolution: Recent Controversies And Challenges]," MPRA Paper 54098, University Library of Munich, Germany.
    16. Piot-Lepetit, Isabelle & Nzongang, Joseph, 2014. "Financial sustainability and poverty outreach within a network of village banks in Cameroon: A multi-DEA approach," European Journal of Operational Research, Elsevier, vol. 234(1), pages 319-330.
    17. Nakano, Yuko & Magezi, Eustadius F., 2020. "The impact of microcredit on agricultural technology adoption and productivity: Evidence from randomized control trial in Tanzania," World Development, Elsevier, vol. 133(C).
    18. Widiarto, Indra & Emrouznejad, Ali, 2015. "Social and financial efficiency of Islamic microfinance institutions: A Data Envelopment Analysis application," Socio-Economic Planning Sciences, Elsevier, vol. 50(C), pages 1-17.
    19. Janda, Karel & Zetek, Pavel, 2014. "Survey of Microfinance Controversies and Challenges," MPRA Paper 56657, University Library of Munich, Germany.
    20. Fan, Ying & Wu, Jing & Yang, Zan, 2017. "Informal borrowing and home purchase: Evidence from urban China," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 108-118.

    More about this item

    Keywords

    Wealth; Microfinance; Nongovernmental; Targeting; China;
    All these keywords.

    JEL classification:

    • I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other
    • O29 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Other
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bap:journl:140205. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Carlson (email available below). General contact details of provider: http://www.bapress.ca .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.