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Accessibility to microcredit by Chinese rural households

Author

Listed:
  • Li, Xia
  • Gan, Christopher
  • Hu, Baiding

Abstract

This paper examines the factors influencing the accessibility of microcredit by rural households in China. The empirical analysis utilises logistic regression, with data collected through a household survey carried out in one province in China. A total of twelve household-level factors are identified as determinants in households' access to microcredit, including educational level, household size, income, among others. In addition to these, results indicate that rural households' accessibility to microcredit can also be impaired by the supply-side factors (e.g., interest rates, loan processing time). The empirical analysis establishes a positive relationship between households' credit demand and access to credit. The paper thus concludes that households should be encouraged to raise capital requirements (for example, create investment opportunities in on/off farm activities) to increase their demand for credit, which can enhance their access to microcredit. In addition, microcredit institutions (such as the Rural Credit Cooperatives) should improve their lending schemes and micro loan products to better suit the diversified needs of the rural population.

Suggested Citation

  • Li, Xia & Gan, Christopher & Hu, Baiding, 2011. "Accessibility to microcredit by Chinese rural households," Journal of Asian Economics, Elsevier, vol. 22(3), pages 235-246, June.
  • Handle: RePEc:eee:asieco:v:22:y:2011:i:3:p:235-246
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    References listed on IDEAS

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    1. Meghana Ayyagari & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2010. "Formal versus Informal Finance: Evidence from China," Review of Financial Studies, Society for Financial Studies, vol. 23(8), pages 3048-3097, August.
    2. James C. Brau & Gary M. Woller, 2004. "Microfinance: A Comprehensive Review of the Existing Literature," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 9(1), pages 1-28, Spring.
    3. S. Illeris & G. Akehurst, 2001. "Introduction," The Service Industries Journal, Taylor & Francis Journals, vol. 21(1), pages 1-4, January.
    4. Evans, Timothy G. & Adams, Alayne M. & Mohammed, Rafi & Norris, Alison H., 1999. "Demystifying Nonparticipation in Microcredit: A Population-Based Analysis," World Development, Elsevier, vol. 27(2), pages 419-430, February.
    5. Zeller, Manfred, 1994. "Determinants of credit rationing: A study of informal lenders and formal credit groups in Madagascar," World Development, Elsevier, vol. 22(12), pages 1895-1907, December.
    6. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555.
    7. Diagne, Aliou, 1999. "Determinants of household access to and participation in formal and informal credit markets in Malawi," FCND discussion papers 67, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. Kajenthiran. K & Achchuthan. S & Ajanthan. A, 2017. "A Quest for Seeking Microcredit among Youth: Evidence from an Emerging Nation in South Asian Region," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 7(2), pages 1-8.
    2. Khoi, Phan Dinh & Gan, Christopher & Nartea, Gilbert V. & Cohen, David A., 2013. "Formal and informal rural credit in the Mekong River Delta of Vietnam: Interaction and accessibility," Journal of Asian Economics, Elsevier, vol. 26(C), pages 1-13.
    3. Jing You & Samuel Annim, 2014. "The Impact of Microcredit on Child Education: Quasi-experimental Evidence from Rural China," Journal of Development Studies, Taylor & Francis Journals, vol. 50(7), pages 926-948, July.
    4. repec:eme:afrpps:afr-02-2016-0010 is not listed on IDEAS
    5. repec:eee:joreco:v:23:y:2015:i:c:p:39-48 is not listed on IDEAS
    6. Collins Asante-Addo & Jonathan Mockshell & Manfred Zeller & Khalid Siddig & Irene S. Egyir, 2017. "Agricultural credit provision: what really determines farmers’ participation and credit rationing?," Agricultural Finance Review, Emerald Group Publishing, vol. 77(2), pages 239-256, July.
    7. repec:eee:joreco:v:21:y:2014:i:3:p:239-248 is not listed on IDEAS

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