Study On The Impact Of The Interactions Between Credit And Insurance On Farmers' Credit Rationing

With the implementation of policy about registration and circulation of land rights,China's rural areas are in the stage from traditional agriculture to modern agriculture,which brings about the adjustment of the structure of farmers and production methods.Some farmers gradually become from commodity producers to subsistence small farmers,concurrent producers and even off-farm employment,while others are becoming a new type of agricultural management,such as family farms and farmer cooperatives.In this context,different farmers need make further efforts on realizing the rational allocation of family resources,which produces different needs from two aspects of capital and risk management.However,both small farmers and scale farmers s are difficult to provide mortgage guarantees to meet the requirements of the bank in the current state.Therefore,the support from the financial sector is limited,which can not solve credit rationing problem.Moreover,the construction of China's agricultural insurance system is still not perfect.The type of insurance is unitary and the level of security is insufficient,which makes it difficult for China's agricultural insurance to give full play to the function of ensuring production and dispersing risk,and further affecting the role of agricultural insurance as collateral guarantee.Therefore,it is necessary to further adjust and optimize the distribution of resources in the current rural financial market,strengthen the cooperation and interaction between the rural credit market and the insurance market,and explore the role of agricultural insurance as a substitute for mortgage guarantee,so as to solve the problem of farmers' credit rationing.From the relevant issued policy documents,since 2009,the central No.1 document,the CBRC and the CIRC and other institutions have repeatedly mentioned the need to explore the interaction mechanism of rural credit and agricultural insurance market to provide a possible way to improve the availability of farmers' credit.It can be said that the publication of these documents shows that the combination of agricultural credit and agricultural insurance has been strongly supported in policy,and more importantly,it also fits the needs of different agricultural management subjects in modern agriculture from two aspects of credit and risk control,which is the most fundamental starting point for the development of the interaction of credit and insurance.Based on the background,this paper tries to answer the following questions:What is the current situation of the development of China's interactions between credit and insurance?Given the different types of credit rationing,can interactions effectively mitigate credit rationing from supply and demand separately?For farmers,can agricultural insurance play a role of mortgage guarantee?For banks,can the value of agricultural insurance cover the risk of loans?If not what is the reason?What is its theoretical basis and internal mechanism?For these questions,based on theories of agricultural risk and insurance,information asymmetry,incentive and experimental·economics,the main objective of this study is to investigate the impact of the interactions between credit and insurance on farmers' credit rationing from two levels of experience and experimental simulation,and to analyze the possible path of the alternative role of policy agriculture for mortgage guarantee in the interactions,which provides the theoretical basis and policy reference for promoting the interactions between agricultural credit and agricultural insurance and alleviating the farmers' credit rationing and ultimately improving the income of farmers.The paper is divided into eight chapters.The main research contents and conclusions include the following aspects.Part one:Sum up the experience of the interactive projects between credit and insurance abroad and home,which provides reference for the interactive form from the choice experiment in the fifth chapter.From the result,the interactive form abroad is mainly based on the combination of index insurance and agricultural credit.The advanced experience and related theories provide the theoretical motivation for the interaction.At the same time,it also finds the object foundation,the administrative foundation,the decentralized foundation and the technical foundation for the development of the interaction between credit and insurance.Although the interactions in some parts of China have achieved a certain success,the interactions are weak on the above four foundations because of the wide range of rural areas and the change of land policy in China.Part two:Demonstrate the current state of the interactions between the two markets of agricultural credit and agricultural insurance in China,and test the relationship between the supply and demand of agricultural insurance and agricultural credit by multivariate probit model.The data analysis shows that the relationship between agricultural credit and agricultural insurance in China is not closely related,which makes the supply of agricultural insurance can't promote the expansion of the supply of agricultural credit,that is to say,credit rationing can not be alleviated.Part three:Analyze and test the influence of the agricultural insurance on the self risk rationing by designing the choice experiment to simulate the development of interactions in the rural areas of China.According to the analysis of the farmers' experimental data from Jiangsu and Heilongjiang Province,it is found that the interactive form designed in the experiment can effectively replace the mortgage guarantee,thus alleviating the self risk rationing of farmers,and the effect on small farmers is better than the scale farmers.However,it is only a simulated situation,which shows that the agricultural insurance in the interactions can play a substitute role of mortgage guarantee for farmers under reasonable design.We need further discuss if it can alleviate the farmers' credit rationing from the bank.Part four:Expound the mechanism of the impact of the interactions on the farmers'quantity rationing,calculates the policy insurance value of four major grain crops value in China and then compare with the loan risks to test the substitution effect of the policy insurance for mortgage guarantee,and put forward the possible ways to improve the substitution effect of the interactions.From the results of calculation,first,the rice insurance can play a substitute role in mortgage guarantee due to the less loan risk,while the policy insurance of wheat and corn can not play a substitute role because the insurance value can't cover the risk of loan.Secondly,the guarantee level of the insurance is not the main factor that affects its substitution effect.However,the current policy insurance can only cover the cost of the crop materialization and the insurance can not give full play to the function of risk management.Therefore,it is impractical to increase the substitution effect by raising the amount of indemnity.Once more,after increasing the insurance coverage the loan risk in the unaffected area can be included in the insurance,but at the same time it will also bring the increase of the cost.So it may be not conducive for the development of the interactions.Finally,the possible ways to improve the substitution effect of the interactions are to develop the implied value of the policy insurance and to reduce the bank's loan risk.Therefore,the mechanism design of the interactions should conform to the theoretical expectation.Possible ways include that the information exchange channel between the bank and insurance company is unimpeded,the risk sharing mechanism of the bank and insurance company is set up,and the first beneficiary of the insurance indemnity is set up as the bank.