An Empirical Study On Credit Channels Choice Of Rural Households In China

Since the concept "Socialist New Countryside" was brought out on the5th Plenary Session of the16th Central Committee of the Communist Party, China’s rural economic development has made significant achievements. China’s new countryside construction is a huge government project which requires large government inputs. After years of reform and construction, China’s rural financial environment has been greatly improved, but the financial system is still the weak link of the rural economic system reform. The formal credit can not meet the needs of rural households, while there are some problems in the informal financial markets. Therefore, it is of great importance to study on the credit market and credit channels choice behavior of rural households.This study includes six parts:The first part introduces the background of this study, combined with the current status and problems of rural credit channels. In addition, we give a brief introduction on the research methods and the opinions of the article, trying to provide a clear perspective for the readers.The second part of the article is literature review. In this section, we provide a systematic review on the studies of domestic and foreign researchers.In the third part, we adopt the statistical description to depict the characteristics of the sample of all rural households, the sample of rural households which borrowed from the formal sectors and the sample of rural households which borrowed from the informal sectors.In the fourth part, we conduct the analysis on the Credit Channels Choice Behavior of rural households. In addition, through the analysis of the informal financial credit, we conduct the in-depth discussion on the situation and advantages of informal credit.In the fifth part, we conduct the empirical study on the credit demand and the credit channels choice behavior of rural households. In this paper, we use the data from the special survey on credit demand of rural households in the year2006. The selected explanatory variables are divided into three categories, basic characteristics of the rural households, the economic characteristics and variables which indicate financial environment. First, the empirical study on the impact factors was conducted by using the Probit Model. Second, we divide all the households into three groups, high-income, middle-income and low-income rural households. Then we study on the impact factors of the credit channels choice behaviors of high-income, middle-income and low-income rural households by using Probit model.In the sixth part, we give suggestion on the rural financial system construction.The innovation of this paper lies in the unique ways of conducting the research. We have studied the impact factors of credit demand of rural households. In addition, we analyze the credit channels choice behaviors of rural households of high-income, middle-income and low-income groups respectively.