Research On The Dilemma And Factors Of Formal Credit Constrains Of Poor Peasant Households

The year of 2016 is the first year which the United Nation finished the admission of the Millennium Development Goals in 2000,at that time,189 political leaders of member countries signed United Nations Millennium Declaration,consisting of eight targets to get rid of extreme poverty and starvation.The year of 2016 is the beginning of “13th Five-Year Plan ”,and there were only four years left to achieve building well-off society in an all-around way.Helping rural households to overcome poverty is a specific requirement of well-off society in strategically.From the experience of global development,an effective market of rural formal credit could bring a great amount of welfare among rural households(smooth consumption,enlarge the scale of operation and production),and play a positive role in the whole poverty-relief activity.Nevertheless,according to the number and the degree of availability of rural households who have applied for loans from formal financial institutions,there were still a proportion of rural households,especially the poor group,whose need could not be satisfied.The trend of this situation would not only restrict them to develop themselves,overcome poverty and achieve prosperity,but also would get in the way of the development of whole economy.Therefore,in order to improve the inclusive of rural finance and increase the availability of formal loans for the poor peasant households,it is crucial that understanding the formation of formal credit constrains of poor peasant households and the factors which influence the availability of formal loans.Therefore,this essay specially focuses on the group of poor peasant households,bases on the internal reasons of the poverty to the character of the target group,and from the perspective of information economic theory,analyze the reasons that formal credit constrains received by the poor peasant households when taking the supply as well as the demand parties into consideration.Believing that information asymmetry,transaction costs and uncertainties are the root causes.Then a statistic description analysis to the life and credit of poor peasant households is made refer to the micro-date of China Household Income Projects(CHIP)in 2013,which can provide an observation background for next empirical analysis.And the definition of poor peasant will be based on a relative perspective using two standard.Then,the Logit model and the Probit model were used to analyze the relative poverty of two groups,and selected indicators from three aspects: the family characteristics,family resources(economic capital)reflecting the risk compensation under uncertainty and family resources(social capital)reflecting the transaction costs.And to explain the factors that influence the formal credit constrains of the poor peasant households.And the income indicators may be endogenous,so used the average working time as its tool variable to do an IVprobit model regression.The outcome of Hausman test and the Wald test of two-step regression found that there is no serious endogenous phenomenon,the original regression results are robust and reliable.It is found that,on the one hand,the effective formal credit demand of poor peasant households is seriously insufficient,especially the general conscious of financial demand has not yet been formed,and the willingness to apply for formal loans is generally not high;On the other hand,the formal financial institutions pay more attention on the economic factors,and insufficient attention on the soft information that reflects their personal character and ability.In addition,some social capital indicators,for example,social trust,which reflects the credit environment,can effectively reduce the transaction cost,which is one of the effective ways to alleviate the weakness that lack of effective collateral and stable income flow of the poor peasant households.So,combining with the comprehensive theoretical explanation,description observation and empirical analysis,it is believed that to break the rigid of formal credit constrains of the poor peasant households,to optimize the rural formal credit market,it is not only requires optimize the mechanism of risk compensation,take advantage of the endowment resources of rural households,but also innovative the financial product and services to reduce the transaction costs,and most importantly,to foster a good financial environment by government,the People's Bank of China and agriculture-related financial institutions together,so as to maximize the information strengths.