The Satisfaction Degree Of Peasant Households' Formal Financing Demand And Its Impact Factors

Nowadays, China is going from traditional agriculture to modern agriculture. Due to fundamental changes in the market environment, the development of agriculture is restricted by both market and resource. As there are period and amount differences in the demand and supply of capital in rural households, there must be strong loan demand from them. Since 1995, China's implementation of the rural financial system reform, to 1999, the Agricultural Bank branches reduced by about 30%, although no major changes in Rural Credit Cooperatives, but due to government intervention and regulation, the historical baggage and other reasons, Rural Credit Cooperatives can only provide limited financial services for farmers, which cannot satisfy the farmers'formal financing needs.Scholars at home and abroad have done a lot of rural finance studies, which have made important contributions to promote the financial reform in rural China. However, fewer studies have been done from the aspect of demand satisfaction degree. In this paper, based on a survey of four villages in two counties in Tai'an city, Shandong, we study the determinants of households'formal financing satisfactory degree. Policy implication is laid after the analysis.The main content of this study are:Firstly, based on the data from survey, most of the households get their main loan from formal financial institutions. However, they prefer to borrow from informal financial institutions when the amount is small. The loans are mainly used for agricultural production. Most of the farmers gain formal loan by collateral, guarantee or credit, and informal loan by oral contract with zero interest. There are some sample households who used to postpone repayment, but no defaults.Secondly, we analyze the supply of formal financing from three aspects: institutions, amount and varieties. The result shows that formal financing needs are not satisfied completely.Thirdly, the determinants of formal financing needs are categorized into five-part(characteristics, capacity, capital, collateral, conditions). Binary logistic regression is used to analyze the degree of formal financing satisfaction. The results show that the gender of the head of the household, number of children in college, family economic type, village cadres identity, credible farmers identity, members of United Families guarantee have significant impact.Finally, policy advices are provided. They are: establishment of a multi-level rural financial system, guide the development of informal finance; deepening the reform of Rural Credit Cooperatives, improve the service level and quality of Rural Credit Cooperatives; develop credit community; innovate financial products to meet the financing needs of different households.