Research Of The Financial Repression In Henan Rural

Central China Economic Zone is an economic zone which is based on national main functionalarea planning a clear focus on the development of regional with central China city group as the support andcovering Henan province and its surrounding areas. The geographical location of Central China EconomicZone is important, the economic aggregate and the market potential are very big, with rich cultural heritage,and the Central China Economic Zone has an important strategic position in the overall situation of thecountry’s reform and development. In2011, the State Council issued "the guidance of State Council on thesupport of Henan Province to speed up the construction of the Central China Economic Zone", the coreviews of the file is the guiding principle of "coordination", and the modernization of agriculture is thedifficulty of "coordination" in document form. View from the Central Plains Economic Zone rural financialreality, the most prominent problem is still the farmers’ credit services, the farmers financial repressionissues constitute the bottleneck of the modernization of agriculture. Henan Province is a major agriculturalprovince in China, which has poor infrastructure in rural areas and a large proportion of the agriculturalpopulation, the “three rural problem” is highlighted. Therefore, use farmers of the province as a sample tostudy the household demand for credit and financial repression in the Central China Economic Zone has aspecial practical significance.In this paper, we analyzed the problems that exist in the Henan farmers in the credit process fromthe perspective of the financial needs of Henan farmers. The analysis said that the reason of Henan farmers’credit demand suppressed primarily due to the serious information asymmetry between of Henan farmersand financial institutions. Due to farmers’ own characteristics and the lack of collateral, they can’t pass therepayment ability, repayment will signal to the financial institutions, which leads to the “loans problem”.For this reason, most farmers can’t get loans, the credit needs of the farmers cannot be fully met, whichhindered the development of the agricultural modernization process.According to further practical investigation of the Henan farmers, we found that due to thelong-term smallholder lifestyle under the traditional agriculture, the deep-rooted ideology makes themgenerally tend not to loan. Even in the case of extremely urgent financing needs of its financing order is asfollows: First, the income to meet the non-agricultural production, followed by the friendship loans from relatives and friends, finally, only when the circumstances of the first two channels can be effectively met,they would have to turn to the financial institutions to apply for the necessary loans. However, because offarmers’ lack credit and secured collateral, even meet the credit needs, the high interest rates also makesborrowing difficult. Therefore, this paper is based on the signal transmission theory and the financialrepression theory, through logical analysis on Henan farmers’ demand characteristics of its collateralmissing, relying on questionnaires of Henan farmers to make empirical analysis and game analysis, tryingto find the right signal display mechanism to give reasonable proposal, and thus achieve a partial solutionto the farmers financial repression problem.