The Research On Interaction Between Rural Credit And Agricultural Insurance

From2004to2014, the central government issued file number one emphasizing ruralfinancial problems, several policy suggestions relating to rural finance reformation and ruralfinancial service perfecting closely, the country giving much preferential policy in financesupporting agriculture. From2004to2008, the government placed particular emphasis onconditional place establishing petty loan organization to solve farmers’ money shortage; year2009the government stressed improving the level of rural financial services; year2011and2012the central government attached more importance to agricultural economy by perfectingrural financial system; year2013the government encouraged and guided industrial andcommercial capital into country; year2014in order to increase the proportion of rural credit,the government put the rural credit in comprehensive assessment, insisting to develop thenew rural financial cooperative organization and to improve the popularization of agriculturalinsurance. All the measures explain the significance of rural finance in developingagricultural economy. In China, the problems of lacking rural credit in rural financial systemare existing for a long time, which restrain the farmers’ enthusiasm in developing agriculture,and confine the advance in agricultural economy, leading to the lag of rural finance. Thepaper considers that to resolve the load in agricultural production, we should promoteagricultural insurance.The paper analyses the trend and actuality of rural credit, agricultural insurance andagricultural economy from1993to2012, then adopts mediator model with cointegration andGranger Causality Test to discuss the relationship among agricultural insurance, rural creditand agricultural economy. The research uses Granger Causality Test to discuss whether thereis Interaction between Rural Credit and Agricultural Insurance, and uses mediator model totestify whether agricultural insurance can promote the economic growth in agricultural byincreasing the rural credit.By analyzing and studying, this paper reaches three conclusions:(1) Absolute amount ofrural credit has increased flexural in long-term, but increased and decreased in short-term,and the proportion of rural credit compared with the total amount of credit in financialorganization is small and has declined in recent years. Agricultural insurance market isstagnant in earlier time and developed slowly, until2007there was breakthrough in agricultural insurance market and premium of agricultural insurance increased markedly.(2)There is no linear relation between agricultural insurance and rural credit, but they haveco-integration relationship in long-term. When lag2years and more, agricultural insurance isthe Granger cause to rural credit, it means that agricultural insurance has the function ofenlarging rural credit, while rural credit is not the Granger cause to agricultural insurance.(3)The estimated results of mediator model show that mediating effect of rural credit is marked,and agricultural insurance can promote the economic growth in agricultural by increasing therural credit. But the mediating effect is sectional, it means that agricultural insurance hasdirect effect on improving agricultural economy or agricultural insurance boosts agriculturaleconomy by other ways.