Choice of Ownership and the Reform of Rural Credit Cooperatives of China Rongrong Weng April 4th, 2006 Agriculture, Food and Resource Policy AGEC 630B - PowerPoint PPT Presentation

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Choice of Ownership and the Reform of Rural Credit Cooperatives of China Rongrong Weng April 4th, 2006 Agriculture, Food and Resource Policy AGEC 630B

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Title: Choice of Ownership and the Reform of Rural Credit Cooperatives of China Rongrong Weng April 4th, 2006 Agriculture, Food and Resource Policy AGEC 630B


1
Choice of Ownership and the Reform of Rural
Credit Cooperatives of ChinaRongrong
WengApril 4th, 2006Agriculture, Food and
Resource PolicyAGEC 630B
2
(No Transcript)
3
Introduction
  • Rural Financial Market of China

  • ?Formal
  • ?Agricultural Bank of China
  • ? Agricultural Development
    Bank of China
  • ? Rural Credit Cooperatives
    (RCCs)
  • providing 84 of
    formal agricultural loans
  • ?Informal
  • Performance of RCCs
  • ?
    Targeting reaching the farmers
  • meet only 25 of
    credit demand
  • ? Sustainability
  • Governance and
    Ownership

4
Previous ResearchDebate On Ownership
  • Shareholding Commercial Banks
  • ?Economic development in rural areas of
    China (Ho,2004)
  • ? Diminishing role of credit
    cooperatives as economy proceeds
  • (Besley, Coate, and Loury,1993)
  • Cooperative Financial Institutions

5
Reasons for the Choice of Cooperatives
  • ? Argument against diminishing role of
    cooperatives
  • ?Empirical evidence in Germany
  • ? Theoretical analysis of change in
    cooperatives to adapt financial
  • competition
  • ? Characteristic of Rural Financial Market of
    China
  • ? Interregional Inequality within Rural
    Sector of China
  • ? Land Ownership
  • ? Economic features of Credit Cooperative
  • ? targeting reducing impact of market
    failures

6
RMB 5389 CAN 786 RMB 1565 CAN 228
7
TargetingMarket Failure and Credit Cooperatives
  • market failure
  • asymmetric information lack of
    collateral
  • transaction cost auditing cost
    enforcement cost
  • Joint Liability
  • Definition The legal liability of two or more
    people for
  • claims against or debts
    incurred by them jointly.
  • Mutual Screening and Monitoring

8
Conclusion and Policy Implications
  • Credit cooperatives
  • Legal Framework
  • Nationwide supporting infrastructure

9
Thank You
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