Rearch On The Elite Capture Of Agricultural Credit Market In China

Long-term success of the China’s economic growth depends on the development of agricultural sector, because C hina has experienced an agricultural evolution of thousands of years. In recent years, the problems about agriculture, rural areas and peasantry were placed country in the forefront. Thirteen-consecutive State Council No.1 Documents focus on agricultural sector undoubtedly sketched out the idea of the central governmental policy overview. According to the national strategic plan, the core of development of agricultural sector is to increase the income of farmers, to cultivate and improve the rural factor markets, and promote the transfer of rural labor to maintain stability and sustainable development of agriculture. And needless to say, it directly or indirectly dependents on the continued support by China’s agricultural financial sector. However, the relatively low level of China’s agricultural finance sector constraints Chinese farmers’ income growth and motivation, and widens the income gap between urban and rural areas. As for social harmony and stability, equitable development has brought a lot of harm, affecting the interests of the farmers. And it restricts the development of the national economy as well. Therefore, China’s agricultural financial issues, is not only the focus of attention, the focus of government decision-making, but also the difficulty of theoretical research.China’s agricultural financial difficulties largely confined to the financial and institutional arrangements of rural financial service system and ignored the constraints of farmers’ particularity and thus, the core issue of agricultural finance is actually the financial problems of farmers. After the financial reform in 1997, the Agricultural Bank of C hina of phasing out of the region led to the hard situation, the financial difficulties of rural credit cooperatives cause the financial demands of a large number of farmers can not be effectively met, and farmers can not maintain and expand production to obtain the necessary funds, which is the key factor of slowing revenue growth. In fact, under the dual constraints of farmers and rural traditional production of long-term behavior of the economic system, the majority of dispersion and small farmers do not have the ability to conduct business at full-competetive market. Coupled with the imbalance of economic development and rural social, cultural and other fac tors, farmers’ loan problem is the problem which academics and policy makers increasingly concerned. However, the author visits to research in residency on the basis of research and found that the reality of the existence of financial problems of farmers are still in its body and services exist obvious deviation from the target, and implementation process distorted dislocation: the farmers who do not need the money are more access to get more financial resources with a preferential nature, the real demands of small farmers can not do anything. And when the field of vision is focused on farmers under the national poverty standard, the more financial expertise poverty al eviation is urgent.Put the main decision- making, behavior selection process and the resulting effect by China’s farmers into the structural frame into society, markets and countries to examine its origins, development and evolution, it shows that: on the one hand, endogenous in deep and complex political, economic and c ultural psychology of farmers in the disadvantaged- farmers directly to countries-social structure, the alienation is a strong dependence on the country, the formation of countries seeking assistance inertia. And a series of gover nment financial resources with ―goodwill‖ and ―goodness‖ to the farmers were unable to solve the dispersion problem of high transaction costs, decentralized and farmers find it difficult to truly become the main participants of agricultural credit market. On the other hand, decentralisim of institutional arrangements as well as the rural economy due to macroeconomic volatility caused tensions and evolution of evil gentry drives out good, the fairness and justice of agricultural financial market are destructed, then rural areas are showing most of the funds are in the rural elite to control and cause the ―elite capture‖ mechanism. ―Elite capture‖ connotation elite pursuing the interests of the farmers by using their own advantages and thus occupy more resources process. ―Elite capture‖ mechanism is the phenomenon under government supervision which is not only one of the most important reason for feeding internal resources in rural areas difficult to deliver fair, but is resulting in a large ―agricultural loans‖ without success key factors.This paper further gives empirical tests based on the data of 20040 questionnaires survey commissioned by the PBC. Three main content of this paper is based on the following conclusions: First, the behavior of households. With the increase of farmers’ income, farmer in poor counties financing order does not significantly change, while non-poor household county selection probability anonymous borrowing increases, the probability of selecting an acquaintance reduce borrowing. With the increase of farmers’ education level, poor county farmers will not change the order of financing, financing order non-poor households counties significantly affected. The average age of household labor, whether savings deposits, the distance from the financial institutions, financial information, and interest rates would have the capacity of financing order and non-poor poverty-stricken counties county households have a significant impact on the measurement results of the specific values of this article at the detailed analys is and conclusions to out. Second, Providing cheap credit fund to rural residents needs to look into the main body that is usually controlled by elite with low transaction cost. In the long term, the behavior of elite deviates from the overall interests, and ―elite capture‖ mechanism is developed in rural credit market. This paper conducts an empirical research based on the data of the questionnaires survey from 10 provinces in C hina, to study the ―elite capture‖ mechanism of rural credit market via the IVQR model. The results showed that the ―elite capture‖ mechanism in non-poor counties is significantly different from that of poor counties. ―Elite capture‖ mechanism of rural credit market in poor counties has not been formed completely. In contrast to non-poor counties where ―elite capture‖ mechanism is widely distributed over rural credit market, leading to structure distortions, function dislocation and target deviation. It’s necessary to establish an inclusive financial system to break the existing configuration, to ensure fair transfer of funds and to establish a co-development mechanism. Third, formal and non- formal finance can both promote income growth. however, the gap between rich and poor on the rural, the informal finance does not play a significant role, and formal financial gap between rich and poor in rural areas has led to further expand. Establishment of an inclusive financial system in rural areas, the rural financial market inclusive growth, is expected to promote pro-poor financial balance between revenue growth and double gap.Finally, this paper focuses on the empirical study of the above conclusions, elaborated relevant policy implications.(1) In recent years, the agricultural loans have a great impact on agricultural sector, but the differences of county agricultural credit market has been multi- faceted, which requires to fit the demands of the main market participants.(2) O nly in the progressive through basic reform of the financial market can fit a series of market structure problems, and to build a framework for coordinated development of the demand is the key issue to achieve sustainable agricultural credit market development.(3) The solidify of power and class causes agricultural loans unfaired and widens income gap, which restricts the construction of a comprehensive well-off. Establishing an inclusive financial system is really important.(4) Institutional change of agricultural credit market mainly subject to national economic development strategy, but the differences in the level of county agricultural credit market has been multi- faceted showed, requiring longitudinal penetration of desalination power elite intermediary position in the agricultural credit market.(5) State budget interventions and resources inevitably evoked induced moral hazard and rent-seeking system, coupled with a natural profit-driven financial capital will further lead to internal rural wealth gap expand. To promote the administrative law system and market supervision system to ensure the accuracy of the finance against poverty, emphasizing pro-poor nature, focusing on fairness.(6) To meet the demands of poor farmers will be effective, and this requires structural adjustments to the longitudinal penetrating with financial, fiscal, taxation et al.(7) The ways of finance against poverty are supposed to focuse on the poor education and training of farmers, employment and entrepreneurship, health care, social security, and enhance the ability of poor farmers and self-development. But remember to draw the boundaries of commerce and policy, the government and the market.