Studies On Problems And Measures Of Credit Needs For Peasant Household In Henan Province

Central plains of China is in the center of China, has always been regarded as the birth placewhere Chinese nation and Chinese civilization originated, and to build a Central plains Economic Zone iseven more meaningful in strategic aspect, it has been listed in the12thfive-year national planningcompendium and also put into a national strategy. The Central Plains based on key developing area whichis showed in the national main functioning plan, is supported by central cities and covering entire Henanand radiating to the surrounding economic areas. It has an important geographic location with abundantgrain production, immense market potentials as well as solid and deep cultural foundation, all of whichformed Chinese national cohesive and centripetal force. In this huge practical construction, the generalguideline and the key task is to coordinate industrialization, urbanization and agriculture modernization thatare so-called three-ization coordination. To solve this problem properly will help Henan Province whichowns many titles such as ‘large emerging industry province, large population province, large agricultureprovince, main grain production region and key region of central plain’ and so on, possess an incomparableorientation advantages in its economic and social development. To solve this problem properly will alsoshow its typicality and representativeness. China is a country with large population, to secure food safetyand supply, agriculture modernization would be a very important issue, it has become the foundation that islying on common prosperous and common rich between cities and counties, it is the key difficulty in theconstruction of three-ization coordination, and one of the bottleneck that influence and restrict thedevelopment of agriculture modernization is the credit requirement of peasant household was restrained,during the development of agriculture modernization, the sampling survey has been carried out for Henanpeasant household, after effectively collect and scientifically analyze, the conclusion shows that, theexpenses of Henan peasant household mainly focus on three aspects, needs for agriculture production andsubsistence, needs for education of children and small scale production and management, as well as otherspecial needs, such as serious diseases or marriages. There are many factors that influence the peasanthousehold’ need for credit, this article will mainly from two aspects, that is starting from both Henanhousehold and financial institutions, to analyze the problems in their needs for credit, through study we found out the main reason that is restricting their credit needs is, there is a information asymmetry betweenHenan peasant household and financial institutions. As a result the peasant household can not get the loanwhich is quite common in countryside, the information asymmetry caused a tough situation in which it isdifficult for peasant household to borrow, and also difficult for financial institution to lend, so the needs forcredit can not be satisfied and the process of agriculture modernization is quite slow, throughout theanalysis on preference of peasant household financing and the real research on them, it showed that, as theexistence of long-term small peasant lifestyle in traditional agriculture, the peasant household normallypreferred not to borrow, in emergency financing need, they will use non-farming income to satisfy it first,and then they will borrow from their friends and acquaintances, only when the previous channels don’twork effectively, they have no other choice but to borrow form the third channel that is financial institution,however, the borrowing entrance for peasant household is always narrow, as they don’t have any credit orobject of pledge, even when they meet the requirement of borrowing, the high interest rate will still stopthem from borrowing. From financial institution’s point of view, as there is marginal cost existing, theamount of money state-owed financial institution lend out is very small, so the interest rate from it is quitelow as well, and the marginal cost is relatively big. Furthermore, big institutions know little about the riskcharacteristic of peasant household, their willingness to repay and their use of the loan, so they areunwilling to lend to peasant household. On the other hand, medium and small-sized financial institutionsknow the repayment capability of peasant household and their credit status well because of frequentlymaking deal with them, and the medium and small-sized institutions has relatively small marginal cost, thatis why the development of medium and small-sized financial institutions can help to solve the creditproblems in countryside. Through a series of study and research, this article conclude the way to mainlysolve the information asymmetry problem between Henan peasant household and financial institutions,based on this, it took various policies and measures to solve the problem of credit needs of peasanthousehold, so as to push forward the agriculture modernization and Central Plains Economic Zone inHenan Province to develop healthily.