Innovative Research Of Rural Credit Based On Peasants’ Reputation

The18th National Congress of Communist Party of China once again stressed the importance of the“three rural issues”. The report pointed out that the “three rural issues” is no longer a local problem, but thekey to the reform of economic system in China. And the rural financial repression has always restricts thedevelopment of rural economy; It has become an important starting point of the “three rural issues”.Based on the financial repression theory, this article analyzed that the main reason of the ruralfinancial repression is the information asymmetry between peasants and financial institutions. So thisarticle takes credit loan as a starting point, has deduced finitely repeated game through the theory of gameand proved that mortgage is more advantage. But the further study found that the primary cause ofinformation asymmetry in our country’s rural financial asymmetry is the lack of collateral. So peasantshave very difficult to meet the needs of the risk aversion of financial institutions. Therefore, based on theSignaling Theory, this article takes peasants’ reputation as a signal for mortgage replacement, and found outthat there are three equilibrium forms, respectively is the pooling equilibrium and separating equilibrium,semi separating equilibrium. These three equilibriums all depend on the reputation benefits (including apositive and an expected loss of reputation), the cost of peasants’ choices and their income of investment.Thus, we have theoretically proved that as long as meet certain conditions, the honorary title can cause theseparating equilibrium.In order to further prove the operability of the theory, this paper has selected and analyzed two realcases, and puts some suggestions at the end of this article.