Study On The Effect Of Social Capital On The Institutional Performance Of Farmers' Mutual Fund

An efficient rural financial market is of great significance to increase farmers' income,alleviate rural poverty,and narrow the gap between rich and poor.For a long time,rural finance development lags behind in our country.The serious mismatching of rural financial supply and demand has become the bottleneck of development of "agriculture,rural areas and farmers".The goal of a new round of rural financial reform in our country is to relax the regulation on rural finance,foster competitive rural financial market,accelerate the establishment of inclusive financial system.The basic meaning of inclusive financial system is to establish a financial system that can provide service for all social strata and groups effectively,especially for the ones excluded from the formal financial system,such as low-income farmers and Micro Enterprises(Helms,2006).However,the financial exclusion is a common phenomenon around the world(Demirguc-Kunt&Levine,2008).At the same time,it may not be efficient to require rural commercial financial institutions to serve for "agriculture,rural areas and farmers" and promote inclusive financial system.Firstly,if there is no clear goal,expanding rural financial supply may result the original borrowers get more loans.But the scope of the borrowers does not expand.Low-and middle-income,micro enterprises still is excluded.Secondly,commercial financial institutions' limitations make it unable to identify some groups' financial demand effectively.Large number of theoretical research and practical experiences show that development of rural cooperative finance is one of the important path and effective way to solve rural financial difficulties.Unlike commercial financial institutions handling required to provide collateral,cooperative financial institutions relies on the popularity,geographical and kinship between members,as well as the long-term living in the same area build up trust,community standards,etc.Based on these "soft information",cooperative financial institution has advantage of information and supervision than commercial financial institutions.Cooperative financial institution can effectively reduce the asymmetric information and the risk of default from lacking of effective mortgage,provide financial services to low-and middle-income groups.Cooperative financial institution's operation mechanisms depending on soft information between the members have essential difference with commercial financial institution.All these factors belong to the category of social capital.Thus it can be seen,social capital plays an important role in the performance of cooperative financial system.However,the development of cooperative financial institutions in China is not smooth.Because the problems of management system,operational mechanism and property right and so on,rural credit cooperatives experience many reforms but lose cooperation financial function already.After ten years' development,rural cooperative foundation is forbidden.Under this background,rural Mutual Fund is a new test of rural cooperative financial organizations in the rural areas in China.But compared with other several kind of new type of rural financial institutions,rural Mutual Fund develops obviously slowly.Unlike official development attitude,because it's close to the farmers' production and living,Mutual Fund organization is welcomed by farmers.Different from the rural Mutual Fund under CBRC framework(China Banking Regulatory Commission),the farmers' mutual fund in Jiangsu province is founded by farmers and rural micro enterprises spontaneously.Compared to the slow development of rural mutual fund,farmers,mutual fund progresses rapidly,to some extent,meet the small short-term financing of "agriculture,rural areas and farmers".At the same time,some scholars pointed out that farmers' mutual fund exist many problems in the actual operation,and deviate the classic financial cooperation pattern,weaken the institution performance of cooperative finance(Shen Jie,Ma Jiujie,2010;Wang Jianying,Chen Dongping,2010;Zhou Zhen,2012).Some farmers'mutual fund can't achieve cooperation and mutual assistance.The tendency for-profit is obvious.In this process,what is the role of social capital?This study constructs the theoretical framework of the institution performance of farmers' mutual fund from the perspective of social capital theory.On the one hand,this study expanded the application range of the social capital theory.On the other hand,this study will help us to understand the institution performance of farmers,mutual fund from a deeper level,and provide policy recommendation for the sustainable development of farmers,mutual fund.The study is divided into seven parts,main contents and conclusions are as follows:Part ?:theoretical and empirical analysis of membership credit accessBased on matching model,the study verified the matching mechanism between borrowers and lenders theoretically.From the nature of loan release,the lender release loans by certain lending technology.The results show that there is assortative matching between borrowers and lenders.Indicating that as the lending technology regularization(??1),the matching farmers need to have more standard information(??1).It means that farmers with more standardized information are more likely to get loans from rural commercial bank.And farmers with less standardized information are more likely to get loans from farmers' mutual fund.Farmers' mutual fund's lending technology can effectively take advantage of social capital,and match with farmers with less standardized information,to a certain extent,increase the membership credit availability.Using bivariate probit model,the study empirically research the lending behavior of farmers' mutual fund and rural commercial bank with peasant household survey data.The results show that the lending behavior of farmers' mutual fund and rural commercial bank varies greatly.From farmers basic productive assets level,compared with the high basic productive assets group of farmers,rural commercial Banks are more reluctant to lend to low basic productive assets group;and farmers' mutual funds are more willing to lend to middle and low productive assets group.From the level of social capital,rural commercial Banks only approved more easily identify political relations(leader),and Farmers' mutual fund due to its advantages of social capital,can recognize the professional cooperation organization relationship(FSC)and relationships with family and friends(cashgift).In addition,farmers' mutual fund can identify non-agricultural income of farmers(NFR),for outsiders,this is difficult to really understand,and the members of farmers' mutual fund have a close.relationship,it can use the social network relations to get such soft information.The empirical results support the inference of matching model which farmers' mutual fund rely on social capital lending technologies,be able to identify commercial financial institutions cannot identify,thus improve the member's credit availability.Part 2:the interpretation of farmers' mutual fund's goal deviationBecause the social capital has some limitations,the membership size and the members' structure of farmers' mutual fund affect its business objectives.Using the data of farmers' mutual funds,this part empirically researches the mechanism of membership size and membership heterogeneity to the management goal deviation.Farmers' mutual fund as one form of cooperative financial institution has a special business objectives,namely maximize the benefits of members.From the limitations of social capital,this paper from the social capital in the cooperative financial organizations play a role in the operation of the required conditions,analysis of factors affecting the benefits of the members of the cooperative financial organization effective operation condition and the mechanism behind the exploratory research.Using the unbalanced panel data of 51 farmers' mutual funds from Nanjing,Yangzhou,Yancheng in Jiangsu province,the study empirically research the influence factors of the benefits of the members.The results show that the influence of membership size on the benefits of the members is "inverted U" shaped relationship,namely with the increase of membership size,the benefits of the members increase first.With the increase of membership,because of the job functions and specialization of loan portfolio financing ability enhancement,capital support,first of all,through scale increasing returns.As membership continued to increase,however,more than the role of social capital boundaries,further separation of ownership and control of farmers' mutual fund,principal-agent problems increasing,will lead to the benefits of the members fall.In addition,membership heterogeneity has significant negative effects to the benefits of the members.Under the heterogeneous membership structure,the society economy status between members is great disparity.It is difficult to carry out effective supervision.Membership heterogeneity and principal-agent problems will worsen,resulting in a decline in membership benefits.Part 3:the choice of development mode of farmers' mutual fundsThis paper analyzes the development mode of farmers' mutual funds in Jiangsu province.Analysis found that a single professional cooperatives internal mutual funds,this kind of farmers' mutual fund has close relationships,and economic ties within the professional cooperatives are frequent,the member's personal credit status and the situation of production and operation are easy to understand,to master the use of funds,reduce or even eliminate adverse selection and moral hazard due to information asymmetry.And the farmers' mutual fund of this mode has smaller scale and homogeneous membership,can better safeguard the benefits of the members.But this development mode's biggest problem is the shortage of funds and homogeneous risk together.For the development mode of farmers' mutual funds based on local community,it can collect the soft information of applicant through village head and accountant at a relatively low cost,and determine whether to lend.But compared to the former mode,this development mode's membership size is not easy to control,prone to excessive scale expansion,and facing large risk.And under this development mode,the mutual relationship between members is weak;it is difficult to implement mutual supervision,and the supervision of the management behavior.The pattern of mutual funds is most likely to alienation as "fake bank".By drawing from Burt's "structural hole" theory,this paper establishes the general model of social network structure of farmers' mutual fund.Based on the extension of social capital,the typical case of the innovation mode of farmers' mutual funds is studied.Research has found that the development mode of multiple professional cooperatives not only can effectively keep the social capital advantage,but also can expand social capital through the "structural hole".