A Study On Loan Behavior And Welfare Effects Of The Large-scale Grain Production Households

The "No.1 Central Document" focuses on the "Three Rural Issues" for 14 consecutive years since 2004 and pays great attention to the rural finance.More recently,the "No.1 Central Document" of 2017 pledged to "strengthen the incentive and restraint mechanism to ensure the sustainable growth of loan on "Three Rural Issues",and to support financial institutions in increasing the county level networks,moderately delegating the authority to examine and approve to the county branches.The financial institutions of more agriculture-related business need to further improve the differentiation assessment methods and implement the awarding policies for the incremental agriculture-related loans.The State supports such rural small and medium-sized financial institutions as the rural commercial banks,rural cooperative banks and village banks,based on county area,increasing services about the "Three Rural Issues".The States also provide support for the financial institutions conducting such businesses as order financing and accounts receivable financing which are suitable for the new agricultural management main bodies.This fully indicates the country has attached great importance to the rural finance and reflects that the existing rural financial system is difficult to meet current financial needs in rural areas.In order to adapt to the development of modern agriculture,strengthen moderate and scale operation of agriculture,the Third Plenary Session of the 17th Party Congress pointed out for the first time:such scale management main bodies as professional households,family farms,farmer specialized cooperatives and other entities can be cultivated in the places where the conditions are sound.Then the report of 18th Party Congress clearly points out that we should "foster new types of agricultural business entities,and develop large-scale agricultural operations in diverse form,and we should establish a new type of system for intensive agricultural operations that are specialized,well-organized and commercialized." This clearly shows us the way to develop new types of agricultural business entities.China is a populous country and guaranteeing food supply really counts.It is strategically important to make sure we can produce and provide the food on our own.Large-scale grain production households is one of the leading specialized households and forms an important part of the new types of agricultural business entities.The sound development of the large-scale grain production households is related to the development of new types of agricultural business entities,related to the construction of agricultural modernization,and more closely related to the country's food security.However with the expansion of the production scale and the increase of the planting cost,the large-scale grain production households will naturally be facing a shortage of funds,but the fact that there exist difficulties and high cost as well as large loan demands in financing stops the large-scale grain production households from getting the loan they need.The usual solution is to depend on the reform made from the top to bottom,paying more attention to the national policy support and rural financial reform etc..The corresponding policy goals will be difficult to achieve because the financial needs of large-scale grain production households are ignored.Therefore it is necessary to deepen the rural financial reform to provide financial support for those households who have the loan demands and the repaying capacity,starting from their loan behavior with the principals of efficiency,rapidness,and low cost.This not only increases the family welfare of the large-scale grain production households,but also effectively promotes the development of new types of agricultural business entities and accelerates the agricultural modernization.This paper aims at studying the loan behavior and analyzing its welfare effects of large-scale grain production households.Specifically it will describe the characteristics of their loan behavior,explores the factors affecting their loan behavior as well as clarifies the welfare effects of these loan behavior.Based on these issues,the author constructs a theoretical framework and forms analytic methods,which will be tested by the actual investigation data of Heilongjiang Province to be provided in this paper.The purpose of doing this aims to analyze the loan behavior of large scale grain production households and the increase of their loan availability as well as the improvement of their welfare level.Naturally the corresponding policies and recommendations are put forward to provide a useful supplement to the further study on loan behavior of farmers and to provide references for improving the construction of new types of agricultural business entities.As for the basic framework and research method,firstly the author adopts the method of statistical analysis to make a comprehensive analysis of the performance and characteristics of loan behavior of the large-scale grain production households;secondly,based on their acquisition of loans,the author identifies the loan channel preference of the large-scale grain production households and then build a mathematical model to explain their loan channel selection from the perspective of transaction cost.By constructing the binary logit model,the author makes an empirical test of the loan channel selection of the large-scale grain production households and reveals the factors which influence their loan channel selection and their working mechanism.Thirdly,on the same basis of the acquisition of the loan,the author explains in theory how social relations affect loan scale selection of the large-scale grain production households and then identifies the main factors by analysis of variance,and then makes an empirical test of the effects of loan scale selection and their working mechanism by using the discrete selection model.Finally,the author takes the loan channel and loan scale as the core variables of the loan behavior to analyze the welfare effect.Based on the utility maximization theory,the author constructs a theoretical model about the welfare effects of loan behavior of the large-scale grain production households,using the field survey data and the model to test the welfare effects of what the loan behavior of the large-scale grain production households have brought and their working mechanism.Therefore,the research contents and basic conclusions are as follows:?:The loan behavior characteristics for the large-scale grain production householdsThrough the actual survey data,combined with the loan investigation information of the major households in the investigated area and the statistical analysis,the author finds that the formal financial channel is the prior choice for the large-scale grain production households who have loan demands in the investigated area at this stage.Productive loan is the main purpose of their loan,mainly on the rice planting.A large number of the large-scale grain production households have actual loan behavior with a very serious credit constraint.Their loan behavior is mainly based on the interest-bearing loans,but the local credit sectors can not meet the loan demands of large-scale grain production household.?:the selection of loan channel for the large-scale grain production householdsBased on the actual situation of the large-scale grain production households in the investigated area,through questionnaire survey and designed problems,the author identifies the loan channel preference of the large-scale grain production households and makes an theoretical analysis on how the transaction costs affect their selection of loan channel.Then the author builds an econometric model and tests the influences of transaction cost on the selection of loan channel of the large-scale grain production households.The statistical analysis finds that they are more inclined to choose the formal loan channels,namely the formal financial channel is their prior choice of loan channel.Theoretical analysis also shows that under the premise of other conditions unchanged,the large-scale grain production households will select the loan channels according to the transaction costs.The low transaction costs and high level of utility are the main reasons for them to choose a certain loan channel.The empirical tests shows that the transaction costs have a significant impact on the selection of loan channel of the large-scale grain production households,in addition,the interest also affects to a certain degree their selection of the loan channels.?:The selection of loan scale for the large-scale grain production householdsThe author firstly explains the influence of social relations on the selection of loan scale of the large-scale grain production households;and then identifies the main factors affecting the selection of the loan scale through the variance analysis;and finally,empirically tests the influences of social relations on the selection of loan scale.Theoretical analysis shows that,those large-scale grain production households who have powerful social relations can get larger loan from both the formal and informal financial channels.The general statistical analysis shows that those large-scale grain production households who choose get a loan of under 200,000 yuan accounts for the highest proportion,accounting for 90.28%of the total number of all large loans.In addition,of all the loan groups,most of the large-scale grain production households choose the scale group of 0-50,000 yuan.The results of single-factor analysis indicate that what has significant influences on loan scale are the farming skills,years of becoming a large-scale grain production household,family income,arable lands,village cadres,relatives of cadres,Party members,members of credit cooperatives and their relatives,members of the cooperatives and local variables.The empirical tests show that farming skills,family income,arable lands,social relations have a significant impact on the loan scale.IV:Welfare effects of the loan of the large-scale grain production householdsBased on the theory of maximum effect,the author constructs a theory model to state how the households' loan behavior influence the welfare effects of loan from the perspective of theory.On the basis of theoretical analysis,the author constructs an econometric model to empirically test the influence of the households,loan behavior on welfare effects and its mechanism.The survey finds that the large-scale grain production households in the surveyed area mainly get the interest-bearing loan from the rural formal financial institutions and most of the loan are mainly used for agricultural production,which brings in relatively high income.The empirical results show that both the amount of loans and the formal financing channels have a significantly positive effects on the large-scale grain production households in their income and expenditure;the informal financing channels only have a significant impact on their income,however the effects were not as obvious as the formal financing channel;and the loan interest doesn't affect obviously the agricultural income and production expenditure of the large-scale grain production households.