Title:	Rural Finance and Credit Infrastructure in China
Authors:	Witherell, William
Keywords:	Finance and Credit
Issue Date:	2004
Publisher:	OECD
Description:	The rural financial sector in China lags behind the development of the real sector, remains structurally weak, and slows down rural development. This is partly due to the slow process of reform in rural finance institutions, but it can also be attributed to more general problems in the country such as the continued channelling of financial resources to state owned enterprises (SOEs), as well as the growing financial fragility and management challenges facing Chinese banks. Since the reforms started at the end of the 1970s, consolidated data on rural savings and loans indicate a net transfer of financial resources from agriculture to industry. While it is difficult to determine the extent to which this reflects the response of rational investors moving funds from low to high return sectors or results from institutional deficiencies in the financial and fiscal system, it is clear that both agriculture and rural industries face important credit constraints. Access to credit is particularly difficult for small-scale farmers. According to a recent national survey of rural families, only 16% of farmers have recourse to formal or informal credit. This is partly due to the lack of collateral (the land belongs to collectives) and the high transaction costs involved in obtaining formal credit, but also to the closing of many local branches of financial institutions and the failure of new ones to emerge. As a result, more than 70% of loans are obtained through informal channels while less than 30% are from financial institutions. The main objective of the held in Paris on 13-14 October 2003 was to identify problems and to suggest policies and approaches to develop a well-functioning and sustainable agricultural and rural finance system which would address the diverse needs of the rural and agriculture sectors. Suggestions were made for the development of alternative financial institutions. Various mechanisms and forms of contractual arrangements were discussed. The role of government policy in establishing such a system as well as the advantages and disadvantages of various credit schemes and credit guarantees were addressed. In this context, the experience of OECD countries was found relevant, as were those of Asian and transition countries in rebuilding their rural finance systems.
URI:	http://10.6.20.12:80/handle/123456789/47104
ISBN:	92-64-01528-0
Appears in Collections:	Rural Development Studies

Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.