Asset Specificity, Reputation Effect And Self-enforcement Of The Interlinked Loan Contracts

Three dimensional rural issues has always been the focus in the construction of the nation. At present,the majority of the rural areas is still in a low level of economic development, the financing amount of farmers is small,high risk of default,etc. Its management is also difficult.This leads to the rural economy be rejected by the financial institution.The supply of the rural financial resources cannot satisfy the needs of the development of rural economy, farmers financing problems has been plagued by farmers and managers.Therefore, it is very important to explore an effective institutional arrangement to ease rural loan difficult problem.The interlinked loan contracts, as a kind of effective contract arrangement, not only effectively relieve the farmer's loan difficult problem, but also solve the problem of the lack of raw materials of enterprise production, promote the development of the rural finance,improve the level of farmers income,realize the sustainable development of rural economy.The interlinked loan contracts make the agricultural enterprises or merchants and farmers together, forming a bilateral rely on the whole,which can reduce the risk of default, let farmers choose performance myself, ensure the normal operation of rural financial market. How the interlinked loan contracts constraint the behavior of the farmers, how to implement the contracts fulfill myself, these are all worthy of our study.The asset specificity and the reputation effect,as a key factor in the performance of incomplete contract,how to effect the the self--enforcement of the interlinked loan contracts.It will be the problems for this study.This paper has taken logical syllogism to analyze the inner mechanism of the the interlinked loan contracts.Then using structural equation model and the field investigation data to verify the theoryhypothesis.The major conclusions of this study are following:Firstly, there is a positive relationship between reputation effect and the self--enforcement of the interlinked loan contracts,in other words,the stronger the reputation effect, the stronger the effect of the self--enforcement of the interlinked loan contracts.Secondly, the stronger the asset specificity invest, the stronger the reputation effect, the stronger the effect of the self--enforcement of the interlinked loan contracts.In this paper,asset specificity will be divided into qualitative special assets(includes input technology and services that the agricultural enterprises offer to the farmers), traded special assets(including brand, sales channels, etc.), material special assets(includes fixed assets and land that farmers input).This study shows that the more investment of the qualitative special assets,the traded special assets and the material special assets,the more the dependence of the farmers for the enterprise.When the farmers default, the loss of reputation capital is huge, so the rational farmers will choose the performance.Thirdly, the different types of asset specificity investment has the different effect on reputation effect,so they have different effects on the self--enforcement of the interlinked loan contracts.The empirical research shows that the qualitative special assets has the largest impact on the reputation effect, so it has the largest effect on self--enforcement of the interlinked loan contracts;The traded special assets later;The material special assets minimal impact on the reputation effect,so it effects on the self--enforcement of the interlinked loan contracts is minimal.Fourthly, the stronger the attribute economic added value of the product,the stronger the reputation effect,the stronger the effects of the self--enforcement of the interlinked loan contracts.