Reconstruction Of China's Rural Credit Rationing And Rural Financial System

The Fifth session of the Sixteenth Central Committee of the Party and the Plan of"the Eleventh Five-Year"proposed that, building the socialist new agricultural countryside is one of the most important historical missions in the modernization process of our nation. We should proceed from the overall situation of socialist modernization drive, to make industry nurture agriculture and cities support the countryside,and to balance urban and rural economic society development. As a key factor in the economic development, the function of capital investment has been testified by researches of many scholars. Some scholars argued that the shortage of capital formation was the root of issues concerning"agriculture, rural areas and farmers", and only through accelerating the formation of agricultural capital, could issues concerning"agriculture, rural areas and farmers"have radical solution. The plan of"the Eleventh Five-Year"also required that we should insist the principle of"give more to, take less from and liberalize the countryside", increase the incremental investment toward agriculture and rural areas from all levels government, and enlarge the range of rural areas covered by the public finance. Whereas the financial transfer payment is limited, the function of credit capital for the rural economic development is self-evident, under the situation that indirect financing is in dominant status in China. But the exceptional difficulties of getting loans in current rural areas have been the"bottleneck"of rural economic development. Therefore, how to find a solution for issues of credit supporting agriculture, has been a crucial problem the task of building the socialist new agricultural countryside must face and solve.Domestic scholars have conducted a series of researches for the problem and gained some progress. But by far neither well-grounded explanations nor rationalization proposals were put forward. Whereas as early as the beginning of last century, western scholars had noticed the phenomenon in credit market that borrowers couldn't get loans at current interest rate even though they were willing to pay the rate. This phenomenon was defined as"Credit Rationing", and was gotten explanations from aspects of availability of credit, factors of risks and interest rate, implicit credit contract, imperfect information, implementation of credit contract and legal system. These theories which...