The Study Of Farmer Household Credit Behaviors In A Perspective Of Incomplete Contract Theory

Rural finance sustains an important mission of providing financial services for the development of "Agriculture, Rural areas and Farmers", but bounded by farmers’ incomplete property rights and the mismatch between the supply and the demand of rural credit system, the growth of farmers’ income and agricultural industrialization are restricted. In 2016, the Central Document No.1 proposed "Accelerate the construction of multi-level, broad coverage, sustainable rural financial service system, develop rural inclusive finance, lower financing costs, and fully activate the rural financial service chain". The "Equality of opportunity" of inclusive finance is embodied in the farmer loan application rights and loan contents. The "business sustainability" of inclusive finance needs to control the debtor defaults, but due to the lack of the mortgaged property, farmers have low opportunity cost of default, so it’s difficult for the creditors to control the breach activities of the farmer households.Through the analysis of existing research literatures of farmer household credit behaviors, it’s found that most of the literatures have focused on the analysis of the credit influencing factors, lacking analysis of farmer household credit behaviors from the perspective of farmer household debt contracts. Research literatures of contract governance mechanism study have focused on individual mechanism, without a systematic research of contract governance mechanism and conducts; most of self-compliance mechanisms and negotiation mechanisms in rural economic research have focused on agricultural cooperation organizations and agricultural products marketing fields, less study is implemented on the research of farmer household credit behaviors; the above mechanisms can help achieve the post efficiency of contract when the farmer households lack collateral property.Given the unverifiable information exists in contract initial stage, it’s impossible to conclude a complete contract. Based on the perspective of incomplete contract theory, the farmer household credit behaviors are divided into two stages-contract concluding behaviors and contract performance behaviors of the farmer households, a theory analysis framework of farmer household credit behaviors is established in this paper. Through the agency by agreement modeling, the influential factors of farmer household credit behaviors and their behavior reactions on contract governance mechanisms are discussed respectively, and empirical tests are conducted as well based on the investigation statistics and cases. It has provided a theoretical basis for decision making on solving the problems of agriculture industrialization and financial supports, and on safeguarding the implementation of inclusive finance.The major research conclusions of this paper:1. Long-term debt contract relationship is beneficial to both farmers and creditors, impacted by wealth constraints, the actual debt contract financing cost of the farmer households is higher than expected; due to the labor transfer effect, the shortening of debt contract relationship leads to the increase of financing cost of farmer households; 2.The borrowing decision and borrowing capacity of farmer households are positively related to the farmers family size; the land area of cash crops and social capital of farmer households are positively related to their borrowing decisions, but its impact is lower than that of family size; the borrowing amount of farmer households and debts duration are positively correlated; the loan channels of fanner households are still dominated by formal financial institutions, even though the agricultural purchasing on credit prevails, but the borrowing decisions of fanner households are not affected.3. In the self-compliance mechanisms, because the reputation capital is restricted by the external financial system and inadequate social security system supply, the efficiency of the self-compliance mechanism is affected; collateral punishments are effective on reciprocal behaviors, but it has a limited effect on the reciprocal behaviors of the farmer households within a co-guarantee group, the loan officer salary incentive mechanism plays an auxiliary energizing role on self-compliance mechanisms.4. In different financing channels, the elasticity of debt contracts is different; due to the impacts on the negotiating mechanisms of the farmers and debtors caused by the negotiating powers and worrying states of the breakdown in talks, the negotiation results reached are different. Farmers are more likely to act against the interests of creditors in the more flexible contracts, but their own interests cannot be protected as well.