Abstract
In this article, the interest rate and non-interest cost are brought into an analytical framework to model a synthetic credit rationing model, under market conditions of a formal finance and an informal finance sector. The research context concerns credit rationing towards agricultural economic organizations in China. Our research indicates that, in order to reduce the loan risk, the formal finance market uses a mechanism which is 'the interest rate - non-interest cost' to implement credit rationing. As a result, more and more agricultural economic organizations have been excluded because of the high credit risk. Existence of the informal financial sector may alleviate the credit rationing, but due to its non-official market status, it will inevitably cause higher financing costs of the agricultural economic organizations. This consequence may help to explain the reason why agricultural economic organizations are in economic difficulties in China.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
