Study On Trust Of Farmer Households' Informal Financing

All along, the non-formal finance in the daily production and life of the residents occupies a very important position, especially for farmers. Healthy development of non-formal rural finance is related to production and living standards to improve and the rural social harmony.The healthy development of informal financing is based on trust , however, the current prevalent of "crisis of confidence" and "trust deficit" and so on existed in our society, especially in the rural community. This has harm to the development of rural non-formal finance.Domestic and international research for non-formal finance is rich, but the trust mechanism studies of non-formal finance are relatively rare. Therefore,the paper has a systematic research on the occurance of trust influence factors and the role of informal financéin order to provide appropriate and useful policy recommendations for the government to manage financial market and enhance the financing capacity of farmers .In this paper,based on the previous research of non-formal financing and trust the the farmers, trust, non-formal finance are defined, and the compliance mechanism of trust is analyzed, and has a targeted analysis of the role and impact of trust in the informal financing.This paper selects Tai'an City, Shandong Province 4 villages in Daiyue areas and Ningyang in August 2010 launched a research. Survey data shows that informal financing in rural areas of China has a widespread demand, a higher incidence; non-formal financing comes mainly from relatives, friends and neighbors and so on, and is single source, small-scale; farmers finance funds are mainly used for non-production activities of rural households; in non-formal finance the interest rate is mostly free;the forms of non-formal financing is mainly oral agreement and promissory note; most of the households in the informal finance is still credible; farmers agree that dishonesty is due to the lack of ability to repay, without consent is due to their lack of integrity .This paper uses game theory to analyze the producing mechanism of trust in the informal finance, and uses SPSS17.0 to make statistical analysis, validity analysis, reliability analysis, correlation and regression analysis for research data, and make empirical analysis for the sample area data to know the trust influential factors of informal finance and the role of trust in non-formal of the financing. Study founds that the relationship among farmers has the greatest impact on the trust of the informal finance, followed by income level and reputation of the farmers, and the borrowing history of farmers is the weakest; and trust behavior appearance for non-formal finance has an important effect, which by affecting relationships among farmers and the reputation of farmers to promote the continuing non-formal lending practices. In view of the above analysis, this paper argues the following aspects to improve of the trust levels of the informal financing: First, accelerate the personal credit system; second, build perfect legislation related to non-formal financing; third,build an ethical culture.