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The demand for credit, credit rationing and the role of microfinance: evidence from poor rural counties of China

journal contribution
posted on 06.12.2017, 00:00 by E Cheng, Abdullahi AhmedAbdullahi Ahmed
Purpose - The purpose of this study is to examine the demand for credit and credit rationing conducted by formal, informal and emerging microfinance lenders in the four poor counties of China. Design/methodology/approach - This paper extends the existing studies on credit rationing in rural China by comparing the determinants of credit rationing by three different lenders, the formal lenders rural credit cooperatives (RCCs), the informal lenders and the new microfinance institutions (MFIs). Findings - MFIs are capable of reaching out to the even poorer households if they develop the loan products based on the income and expenditure flows of these households. Research limitations/ implications - The determinants of credit rationing by three types of institutions are estimated separately. Practical implications - RCCs in China shall change their policy of discrimination against female-headed households. RCCs shall also simplify the loan application procedures and assess the clients based on their repayment capacities rather than the age or assets alone. RCCs could learn from MFIs to use incomes from migrant workers as a criterion to assess the loan applicants. Social implications - gender equity for loan access. Originality/value - This paper extends the existing studies on credit rationing in rural China by comparing the determinants of credit rationing by three different lenders, the formal lenders (RCCs), the informal lenders and the new MFIs.

History

Volume

6

Issue

2

Start Page

295

End Page

315

Number of Pages

21

eISSN

1756-1388

ISSN

1756-137X

Location

United Kingdom

Publisher

Emerald Group Publishing Limited

Full Text URL

Language

en-aus

Peer Reviewed

Yes

Open Access

No

Era Eligible

Yes

Journal

China agricultural economic review : evidence from poor rural counties of China.

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