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Risk Rationing in China Rural Credit Markets

Author

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  • Khantachavana, Sivalai V.
  • Turvey, Calum G.
  • Kong, Rong

Abstract

The purpose of this paper is to provide a specific test of Boucher, Carter et al. (2008) framework on risk rationing. The data were collected through a survey of 730 farm households in Shaanxi province conducted in November 2010. We compare factor associated with risk rationed, quantity rationed and price rationed farmers. Seemingly unrelated regressions are performed using risk rationing, quantity rationing and price rationing measure as the dependent variable and measures of demography, wealth, income, year of farming and risk aversion as independent variables. We apply seemingly unrelated regression, cluster analysis and cross tabulation in the study. According to a seemingly unrelated regression, we find existing risk rationing is due to risk-based behavior by borrowers. A cross tabulation results support the proposition by Boucher, Carter et al showing the financial wealthy is risk rationed and relatively land-poor is risk rationed. This paper is believed to be among the first empirical validation of the risk rationing theory.

Suggested Citation

  • Khantachavana, Sivalai V. & Turvey, Calum G. & Kong, Rong, 2011. "Risk Rationing in China Rural Credit Markets," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 104021, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:104021
    DOI: 10.22004/ag.econ.104021
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    Cited by:

    1. T. O. Ojo & L. J. S. Baiyegunhi, 2020. "Determinants of credit constraints and its impact on the adoption of climate change adaptation strategies among rice farmers in South-West Nigeria," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-15, December.

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    Keywords

    Marketing; Risk and Uncertainty;

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