Finaneial Dualism In Rural Households Credit Market

With China’s financial system reform goes deeper and the process of marketization moves forward, as a representative of the informal finance, folk lending is getting more generally in the rural economy, which is bound to play an important role in the finaneial dualism. However, the relationship between formal finance and informal finance has been controversial with no conclusion, the main arguments are divided into two types, alternative and complementary relationship. However, whether the alternative or complementary relationship studies are mostly qualitative and general, being the lack of micro guiding significance for the improvement and development of the rural financial system. With the data collected in Jiangsu Province, the quantitative analysis method is used to analysis the relation between formal finance and informal finance. A new view is put forward based on the perspective of supply and demand, and we propose some suggestions for the formal finance and informal finance development.First of all, this research systematically summarizes the theoretical research of formal finance and informal finance. In the analysis of informal financial system, the relationship between formal finance and informal finance are summarized as alternative and complementary relationship research. Some further studies make conclusions about the heterogeneity among income, occupation and gender.Then, adopting the actual data of county customers and non-customers, conduct Probit model regression between the formal finance and informal finance relationship, thus test the hypothesis above.The study found that:(1) under the finaneial dualism, there is a certain gap between finance supply and need, but it apparently is bigger for formal finance, with the certain room for improvement;(2) farmers’ financial cognitive ability plays a significant role to improve service ability of financial institutions;(3) in the rural credit markets,there is a complementary relationship between formal finance and informal finance in supply and demand level; (4) there isn’t heterogeneity relationship among income and occupation obviously.This study is not only to improve the finaneial dualism in our country, but also provide a theoretical basis for regulating the informal financial development and enhance the level of formal financial services. It will help promote China’s rural financial system reform and economic development.