Synergetic Mechanism Of Agricultural Insurance And Agricultural Credit In Hebei Province

In recent years, with series of policies benefiting that support and benefit farmerscontinuously being implemented, the rural economy has been increasingly active.Agricultural credit has played an important role in promoting the employment offarmers, increasing farmers’ income developing the rural economy and so on.However, the risk of agricultural credit is higher, credit rationing in agricultural creditmarket is much more serious, the credit needs of agriculture-related businesses andfarmers cannot meet, which hindered the sustainable development of agriculturalcredit in large part. Considering the weakness of agriculture and the current situationthat farmers and agriculture-related middle and small-sized enterprises lack adequateand effective collateral, the state has adopted a clear policy " to explore theestablishment of Bancassurance interactive mechanism between rural credit andagricultural insurance"; insurance companies and credit institutions in some parts ofthe country have also done useful attempt to make the agricultural insurance andagricultural credit synergies effectively in order to alleviate difficulties in loans forfamers.So this paper selects "synergetic mechanism between agricultural insuranceand agricultural credit "as the research object, the text is divided into five parts：thereis an introduction in the first part, including research background significance,methods and innovation. In reference to the literature at home and abroad the researchon the cooperative system between agricultural insurance and agricultural credit werepresented and summarized. The second part defines the concepts of agriculturalinsurance and agricultural credit, explains general intention of synergetic mechanismbased on the synergetic and financial symbiosis theory, and then builds theoreticalmodels to deduce conclusions that agricultural insurance as a substitute for collateralcan reduce agricultural credit rationing; agricultural insurance has the option naturethat can increase the lender’s expected return; agricultural insurance hascompensation function that can reduce farmer’s passive default probability;agricultural insurance may bear part of the transaction costs that can enhanceinformation production capacity of credit institutions; under the dual constraints of agricultural insurance and agricultural credit, farmer’s moral hazard is reduced.Meanwhile, using information and channel resources of agricultural credit institution,the problem of information asymmetry of agricultural insurance can be eased, thatwill help to expand the agricultural insurance market. The third part, through theanalysis of economic and financial data over the years in Hebei province, discuss thebasic characteristics of the agricultural insurance and agricultural credit to assume therelationship between agricultural insurance and agricultural credit, use parametrictests, co-integration test and Granger causality test to prove the assumption, analyzeof the test results taking statistical methods and practical reasons into account andsuggest that non-significant synergies mainly due to misplaced services objects, theweak cooperative foundation, and the simplified credit insurance product structure.The fourth part, contrast the domestic and foreign synergetic model at home andabroad and sum up the experience and inspiration from the views of interconnectioninsurance type, cover style, sharing premiums and bancassurance model.The fifth part,based on theoretical analysis and empirical study in the previous sections, put forwardthat the government should provide financial support to promote the development ofagricultural credit insurance; laws and regulations should be improved to regulate therights and obligations of the parties; make best efforts to encourage farmers’enthusiasm; complete insurance cooperation mechanisms, in order to makeagricultural insurance and agricultural credit synergistic.