Private Lending、Social Network And Poverty Vulnerability

Since the reform and opening up, China’s financial development and poverty mitigation work has made tremendous progress, both the scale and efficiency of financial development continues to improve. Along with the rapid increase of economic level in urban and rural areas, the poverty rates have dropped significantly, especially the effectiveness of poverty alleviation in rural areas is significant. Statistics data of National Bureau show that in 2014 the poor people in rural areas are 70 million,12.32 million less than last year. Although China has taken an active and effective anti-poverty development strategy, how to solve the problem of poverty in the rural areas is still faced with a major test. Increasing income of farmers has always been a priority. Especially since the new era, the poor show the trend from absolute poverty to relative poverty, single-dimensional poverty to multidimensional poverty, static to dynamic poverty. The traditional methods to measure poverty are always after the event, and now researchers are increasingly concerned about the advance of poverty prevention and elimination. The concept of poverty vulnerability came into being.Among the effects of poverty in various vulnerability factors, the role of private lending and social capital is of a growing concern. As one of the effective ways to finance development to reduce rural poverty, the development of rural finance has important theoretical and practical significance. However, in the context of China’s economic transformation, social credit system is not perfect. The phenomenon of prominent financial repression directly affects the financial body of social capital acquisition and configuration. Survey shows that formal credit availability of rural households is only 27.6%, lower than the national average 40.5%.Therefore, rural formal credit constraints are so severe that the role of informal finance cannot be ignored. The private lending as an important part of private finance has become the focus of research.Social networks act as the most important component of social capital. Especially in rural China with a strong human touch, native social networks can not only alleviate poverty vulnerability by increasing rural incomes, promoting human resource accumulation and expanding employment opportunities, they can also effectively reduce the information asymmetry by promote private lending, thus making indirect effects on incomes of rural household and reducing poverty vulnerability of farmers.Based on micro-data, this paper studies the private lending and its effects on poverty reduction from both static and dynamic dimensions. It also studies social networks in different income groups in the size of the income effect of a quantitative estimate. Then, mediating effect of social networks on the development of rural income was estimated. This dissertation is divided into 7 chapters:Chapter 1:Introduction. This part induces the background and the significance, the methods and structure of this paper. It also introduces the innovation and deficiencies of the research.Chapter 2:Review of Theory. This chapter is about the relevant theories by recalling the theories about poverty vulnerability and social capital, especially social networking mechanisms to alleviate poverty and lays the foundation for subsequent analysis.Chapter 3:The development of Rural Finance in China. Use relevant data and graphs to clarify the development of Chinese rural finance from three aspects: rationality, development and risk analysis.Chapter 4:Research Design. This part presents the sample selection and data sources of the research.Chapter 5:Empirical Research. The fifth part uses the CFPS data for statistical and econometric analysis. Combined with China’s actual situation, this chapter gets some preliminary conclusions on social networks and private lending from both static and dynamic dimensions.Chapter 6:Inspection and Estimation of Mediating Effect. By constructing a mediating effect test on the basis of the previous discussion, this part examines the mediating effect of social networks on the development of rural income.Chapter 7:Conclusions and policy recommendations. This includes policy recommendations for rural regional development and social network development to promote private lending.