Rural Financial Institutions Research Articles

Digital Inclusive Finance, Rural Loan Availability, and Urban–Rural Income Gap: Evidence from China

Reducing the urban–rural income gap stands as a pivotal factor in attaining sustainable economic development. Policymakers and researchers have focused on whether digital inclusive finance can narrow the urban–rural income gap. Utilizing provincial-level panel data from 31 regions in China, this paper empirically tests the impact of digital inclusive finance on the urban–rural income gap across different areas of China, specifically analyzing the mediation effect of rural loan availability. The findings indicate that (1) the expansion of digital inclusive finance can enhance the inclusiveness of financial services in rural areas and narrow the urban–rural income gap; (2) the effect of digital inclusive finance on the urban–rural income gap exhibits regional heterogeneity; (3) the rural loan availability has a mediation effect on the urban–rural income gap, but its growth will weaken the narrowing effect of digital inclusive finance on urban–rural income gap; and (4) the reduction in the urban–rural income gap attributable to digital inclusive finance exhibits a nonlinear relationship with the level of urbanization. This paper recommends guiding the digital transformation of rural financial institutions and enhancing farmers’ financial literacy to increase the availability of loans in rural areas. Furthermore, implementing region-specific policies and regulations could effectively narrow the urban–rural income gap.

Rural financial institutions, access to credit and production inputs of rural households

This paper studies the impact of rural financial institutions on farmers' production input from the perspective of rural bank branch adjustment and rural household credit access. Based on the data of rural bank outlets and China Household Income Survey (CHIP) in 293 prefecture-level cities in China from 2013 to 2018, the results show that rural financial outlets have a significant positive impact on farmers' production input, and each unit increase in the number of bank outlets will increase farmers' production input by 0.24 units, and the proportion of consumer expenditure will decrease by 0.071 units. The number of bank outlets has significant heterogeneity of household head and region on the production input of farmers, and the bank outlets have a greater impact on the production input of farmers with high education level. The increase in the number of bank outlets in the eastern region can significantly increase the production input of farmers, but the increase in the number of bank outlets in the central and western regions will reduce the production input of farmers. The mechanism analysis shows that the increase of branches of rural financial institutions improves farmers' access to credit, which is an important channel affecting farmers' production input. This study provides a reference for the reform of rural financial institutions and the revitalization of rural industries in China.

Climate change and credit risk in rural financial institutions: A study based on transition risk

AbstractThis study empirically investigates the impact of climate change on credit risks in rural financial institutions, emphasizing transition risk. We analyzed data from 202 rural financial institutions across, China spanning 2012 to 2020. The empirical findings reveal the following: Firstly, climate change exerts an inverted U‐shaped influence on credit risks in rural financial institutions. Secondly, the inverted U‐shaped relationship is influenced by both the level of digital development and uncertainty in climate policy. Lastly, heightened levels of digital development and increased uncertainty about climate policy can mitigate the negative effects of climate change.

Farmers’ cooperatives and smallholder farmers’ access to credit: Evidence from China

Farmers’ cooperatives serve as effective means of transforming smallholder farmers’ production methods in the process of agricultural modernization in developing countries. This paper aims to examine the credit effects of farmers’ cooperatives by employing a framework based on institutional finance theory. Based on the 2021 China Household Finance Survey data, an endogenous switching probit model is employed to explore the impact of cooperative membership on smallholder farmers’ access to credit. The research findings indicate the following: i) Farmers’ cooperatives possess information advantages, as financial institutions gain access to smallholder farmers’ information through the organized value chains of farmers’ cooperatives, leading to a direct reduction in transaction costs and an improvement in access to credit. ii) Farmers’ cooperatives can promote smallholder farmers’ agricultural investments, increase household income for smallholder farmers, enhance the liquidity of farmland, and further improve access to credit for smallholder farmers. Therefore, farmers’ cooperatives represent an inevitable trend in the agricultural modernization of developing countries. Rural financial institutions should alter their financial models and resolve adverse selection and moral hazard issues in the credit process through organizational approaches, thereby enhancing access to credit for smallholder farmers.

The impact of climate change on credit risk of rural financial institutions: A threshold effect based on agricultural insurance

Climate change affects the stability of the rural financial system. This paper uses the multi-agent model to deduce the impact mechanism of climate change on the credit risk of rural financial institutions, and conducts a series of empirical tests. The results show that: (i) climate change has an adverse impact on the credit risk of rural financial institutions. (ii) agricultural insurance shows a threshold effect in the process of climate change affecting the credit risk of rural financial institutions. (iii) high-level agricultural insurance can mitigate the adverse impact of climate change on the credit risk of rural financial institutions. It reveals that the agricultural insurance is a crucial policy for taking precautions.

Exploration of Marketing Strategies of Rural Financial Institutions in the Context of Internet Finance--Bank A as an Example

As an essential component of China's financial institution system, the development and operation of rural financial institutions are of great significance to the economic development of capital financing, the improvement of the "Issues concerning agriculture, rural areas, and farmers," and the promotion of financial inclusion in rural areas and urban-rural areas of China. On this premise, based on the impact of Internet finance on rural commercial banks and the comparison between rural commercial banks and other commercial banks, this paper briefly discusses the improvement direction of marketing strategies of rural commercial banks using the traditional 4P theory as an example. In terms of products, we can learn relevant technologies from large commercial banks and actively develop products that meet customers' needs; the pricing strategies of commercial banks or financial institutions in different rural areas should be focused, and product prices can be dynamically adjusted according to the background of the general environment rather than fixed; at the same time, we should deepen offline sales channels and actively open online channels, combining online and offline media; finally, agricultural commercial banks should adhere to the principles of innovation. Finally, agribusiness banks should comply with the principles of invention, stability, and compliance and pay attention to adopting technology for risk control.

The Impact of the Banking Sector and Its Heterogeneity on the Scale and Quality of China's Exports

Abstract: Using data of export transactions and the regional distribution of banking branches in China, this article examines the effect of bank development on the export scale and quality of firms. The results show that these factors are significantly enhanced by bank development. Compared to large state-owned commercial banks and rural financial institutions, the development of city commercial banks and joint-equity commercial banks has a more significant impact on improving the export scale and quality of firms. This article also examines the channels through which bank development benefits the export performance of firms. Indeed, bank development significantly increases firms' access to credit and reduces their credit costs, leading to improved export performance. These findings have important implications for financial development and export upgrading.

Food and nutrition security status in Southwest region of Ethiopia: Evidence from Kaffa zone

Hunger eradication as being one of the sustainable development goal and critical contributor for economic growth, the extent of poverty and food insecurity had become the limiting factor not to achieve these goals because of different constraints. Therefore, the current study investigated the status and determinants of food and nutrition security in one of Ethiopian zones encountered with an alarming trend of productivity decline but endowed with different natural resources which is Kaffa zone of Southwest region. The finding generally implies, large proportion of households who were food secured were also nutrition secured, compared to their counters. Unlikely, lager proportions of nutrition secured households were found to be food insecure but from the entire nutrition non-secured households, small proportion of them were found to be food insecure. The study further indicates that, 65.87% and 87.11% of the entire households were food and nutrition secured, respectively. This implies that, though there is low production and productivity of crops in the study area which affects food security status of the household due to minimized daily calorie intake, it is rich in the availability of different edible crops that constitute for boosting dietary diversity and food consumption score which results in nutrition security. Among the main constraining factors of food and nutrition security found using logit model, sex of the household head, family size, education level of the household head, land size, irrigation, livestock holding, off-farm and non-farm activities are the core and significant in the study area. Thus, improving access to irrigation, introducing off/non-farm activities for the households through promoting better credit facility via the establishment of adequate rural financial institutions, promoting family planning and enhancing the existing livestock veterinary services can be considered as a panacea to improve both food and nutrition security of the rural households in the study area.

Overcoming Obstacles to Agriculture Finance in India: A Vibrant Prospect of Agri-Entrepreneurship

The traditional agriculture in India used to be affected adversely by the delay in monsoon, drought, inferior quality of seeds and insufficiency of fertilizer and shortage of skilled labour etc. A clear vision of the Government, since independence, changed the environment of agriculture in the country to a great extent. Constant initiatives, in the form of promoting agri-financing by rural credit, infrastructural development, upliftment of standard of living of the farmers, supervisory role of regulatory bodies to provide banking services, strengthening rural financial institutions, have created a healthy ecosystem of agri-entrepreneurship. The increase in demand due to change in food habits of the people, combined with better purchasing power, is encouraging the entrepreneurs to come up with innovative products. The development of financial markets in India, to provide better financial services in the form of insurance and risk management etc., is bringing agrientrepreneurship on the threshold of a golden era.

Effect of Market-Oriented Reform of Rural Financial Institutions on Promoting County Economic Growth

This study regards the reform of rural credit cooperatives into rural commercial banks as a “quasi-natural experiment.” Based on the panel data of 158 counties and districts from 2005 to 2019, it uses the progressive Differences-in-Differences (DID) to systematically evaluate the effect of the reform of rural credit cooperatives on county economic growth. The study finds that the reform of rural credit cooperatives has significantly promoted county economic growth, which is still valid after parallel trend tests, replacement of explained variables, and consideration of sample self-selection. Heterogeneity analysis finds that the reform of rural credit cooperatives can promote county economic growth more obviously in the samples of urban agglomeration, power-expanding counties, non-impoverished counties, and non-agricultural counties in Central Plains. The mechanism analysis finds that the reform of rural credit cooperatives can promote county economic growth through channels such as improving the level of financial development and optimizing the industrial structure. The conclusions of this study not only expand the understanding of existing references on the effect of rural credit cooperatives on county economic growth, but also provide important inspiration for the government to further deepen the reform of rural credit cooperatives and accelerate the pace of rural revitalization.

Characterization of Existing Rural Finance Markets that can Enhance Participation in Climate Smart Agricultural Technologies in Kenya

Purpose: In Kenya, small holder farmers face climate change related challenges. It is therefore imperative to enhance adaptive capacity through climate smart agricultural (CSA) technologies. Access to finance is a significant enabler for adoption of CSA technologies yet small holder farmers, especially women, have an acute financing gap for agriculture. The purpose of the study was to characterize existing rural finance markets that can enhance adoption of Climate smart agricultural technologies among small holder farmers in Kenya and also improve the participation of other agricultural value chain actors in climate smart agricultural technologies. This was to enhance a better understanding of existing rural financial services available to agricultural value chain actors and the potential of the financial institutions to increase credit access to the value chain actors.
 Methodology: The study used cross sectional data gathered through questionnaires administered on farmers, rural financial institutions and other actors in eight, Kenya Climate Agricultural Project (KCSAP) counties in Kenya. Data was analyzed using Stata statistical package and presented using tables and figures.
 Findings: Rotating and savings credit associations (ROSCAs) were the main credit source for most households. Findings revealed that farmers rarely access insurance for their farming activities. Unlike farmers, other actors for instance, agro processors and agro dealers get loans through mobile phones where short term loans were borrowed from different providers. Majority of financial institutions were serving agricultural sector.
 Unique Contribution to Theory, Practice and Policy: The study had presumed that access to rural financial market services by value chain actors in climate smart technologies for crops and livestock will be enhanced and this will increase adoption in the target Counties. The theory or assumption was validated in a workshop by all stakeholders which was followed up by linking up the value chain actors and the financial institutions through capacity building forums. Financial institutions could leverage on existing models used by ROSCAs to increase access to rural financial services especially by women and youth. A gender-transformative approach should be considered to increase women access to rural financial services.

Banking structure and government policies regarding SMEs financing

ABSTRACT This study adopts the view that at the current stage of economic development in China, the factor endowment structure is characterized as abundant labor and scarce capital, which determines that the viable industrial structure should be dominated by small- and medium-sized enterprises and the optimal banking structure should be dominated by labor-intensive banks. Using bank assets per employee to measure labor intensity of banks and investigating the data from various sources, we find that in China, major commercial banks and rural financial institutions are labor-intensive banks providing two thirds of the total bank loans to small enterprises. Furthermore, the cross-region investigation reveals that on average small-sized enterprises are positively associated with labor-intensive banks, and labor-intensive banks contribute significantly more to the SMEs business incomes than capital-intensive banks. This study also discusses some implications to researchers and policy makers.

Formation mechanism of financial vulnerability in rural China based on Markov model and countermeasures

Abstract As an important part of the national economy, finance plays a leading role in the configuration of the daily production life of urban and rural enterprises and residents. In order to promote the further development of China’s rural economy, deepen rural financial reform, and seek the formation mechanism and countermeasures of China’s rural financial vulnerability, this paper proposes a research method based on Markov model for analyzing the formation mechanism and countermeasures of China’s rural financial vulnerability. The results of the study show that the method effectively reveals an overall decreasing trend of rural financial vulnerability in China in recent years. In response, more reasonable rural financial institutions should be established to optimize the rural industrial structure and improve the ability to prevent rural financial risks, while conducting dynamic organizational management to ensure that the organizational structure and organizational management of rural finance must be compatible with the coordinated development of the rural economy and finance.

乡村振兴背景下大学生服务农村金融机构的调查分析——以湖北经济学院法商学院为例

乡村振兴背景下大学生服务农村金融机构的调查分析——以湖北经济学院法商学院为例

Coupling Coordination and Interactivity between Farmland Transfer and Rural Financial Development: Evidence from Western China

The farmland transfer system (FTS) and rural financial development system (FDS) are economic systems with extensive connotation and coupling characteristics, and the interactive development of these systems is of great significance to rural economic growth. This study takes 10 provinces in western China as the research object and establishes a multi-index evaluation system. The entropy method, coupling coordination model and panel vector autoregression model (PVAR) were used to explore the comprehensive development level, coupled coordination degree and interaction of the FTS and the FDS in western China. The following results can be drawn: (1) the comprehensive development level of the FTS in western China is much higher than that of the FDS in both time and space; and (2) the FTS and FDS in western China have a strong correlation. The two subsystems interact with each other and restrict and promote each other, and their coupling coordination degree is optimized year by year. However, the coupling coordination degree and relative development level of each province vary by the economic development level, natural resources, agricultural productivity level and financial development structure of each province. (3) The FTS and FDS have the greatest effect on themselves, respectively, and the effect of the FTS on the FDS is greater than that of the FDS on the FTS. We suggest that the government strengthen support for rural financial institutions and speed up the market-oriented reform of agricultural land, rural finance and other production factors to realize the long-term mechanism of coordinated development of the FTS and FDS.

The Impact of Farmland Tenure Security on China’s Agricultural Production Efficiency: A Perspective of Agricultural Production Factors

Improving agricultural production efficiency is an effective means to ensure food security and promote agricultural sustainable development in China. Stable agricultural land property rights help optimize the allocation of production factors and improve production efficiency, and it is of great practical significance to study the influence of farmland tenure security on agricultural production efficiency. Therefore, this research utilizes the 2018 data of the China Labor Dynamics Survey (CLDS) to analyze the influence of farmland tenure security on agricultural production efficiency and its internal transmission mechanism under the background of agricultural land ownership confirmation. The results show that the enhancement of farmland tenure security not only directly improves agricultural production efficiency, but also indirectly affects agricultural production efficiency through the intermediary variable of agricultural investment. Moreover, it also shows that farmland tenure security has heterogeneity effects on different farmer regions and production modes and can significantly improve the production efficiency of farmers in plain and hilly areas who adopt fully mechanized and partially mechanized farming. We suggest that policymakers should also deepen the reform of the rural factor market, develop diversified rural financial institutions, actively promote the involvement of small farmers in the public sector economy, and improve the service level of agricultural machinery in order to guide the development of the tertiary industry in non-plain areas and to reduce the land endowment effect of farmers.

Complementarity or Substitution: A Study of the Impacts of Internet Finance and Rural Financial Development on Agricultural Economic Growth

Based on the Chinese county-level panel data from 2014–2018, in the study reported in this paper, we empirically tested the “complementarity and substitution” effects of internet finance and rural finance on rural economic development using the feasible generalized least squares (FGLS) estimation method. The research data were obtained from the China County Statistical Yearbook. Similarly, the data of agricultural credit societies were obtained from the unique database of the agricultural credit societies of Shaanxi Rural Finance Research Center, while the internet finance development index was obtained from the Digital Finance Research Center of Peking University. In this research, we found that rural finance and internet finance contribute to rural economic growth. In the context of rural economic growth, internet finance and rural finance development show a substitution effect. The scale and efficiency of rural finance contribute to rural economic growth, while the structure of rural finance has the opposite effect. The development of internet finance reduces the marginal contribution of the rural financial scale and efficiency to rural economic growth. It weakens the negative effect of the rustic financial structure on rural economic growth. Furthermore, the development of internet finance contributes to the rural economic growth of counties of high economic levels but hinders the development of counties of low and medium economic levels. In counties with a high economic status, the development of internet finance and rural finance have a complementary effect on rural economic growth, while in counties of low and medium economic levels, we can observe a substitution effect. These assessments provide guidance, a source for policy recommendations and a reference for researchers and policy makers seeking to optimize the structure and break the monopoly pattern of agricultural credit cooperation in the rural financial market and to strengthen innovation and significantly improve the operational level of rural financial institutions. Moreover, the development of internet financial business and technology is necessary to overcome the demerits of traditional financial institutions.

"A Study on Analysis of Operating and Financial Performance of Regional Rural Banks in Indian context "

The development of India's economy and rural sector depends heavily on agriculture, so it is essential to develop strategies for increasing income and creating jobs in rural areas, creating programs to reduce poverty in unbanked rural areas, and creating the right institutions and mechanisms to meet the credit needs of the rural sector. A significant step in this direction was the establishment of Regional Rural Banks (RRBs) in the middle of the 1970s. The RRBs are specialist rural financial institutions that provide small and marginal farmers, agricultural workers, artisans, and small business owners with the credit they need to grow their businesses.However, there were also commercial and cooperative banks to meet the financial needs of the rural sector. While the commercial banks' efforts to increase agricultural credit were limited by their concentration on profitability, the cooperative banks' efforts were also hindered by a number of financial difficulties. Even yet, over time, Regional Rural Banks have been able to increase their clientele, their revenue, and their ability to provide credit to the underprivileged. However, in the current environment, a number of flaws have also surfaced that have weakened their profitability and viability, such as past due, loan recovery, nonperforming assets, etc. Regional Rural Banks play a significant role in the delivery of credit in rural regions by offering credit facilities to the economically weaker segment of the population for the growth of trade, industry, and agriculture. In India's agricultural and rural development, regional rural banks are essential. Through their extensive network, the RRBS have a greater reach in India's rural areas. The financial stability of the rural areas in India is a key factor in the success of rural credit. RRBs are a crucial source of finance for rural areas, and they are in charge of providing different sorts of agriculture credit in rural areas with the loans they require. The majority of regional rural banks are currently dealing with issues including past due, recovery, nonperforming assets, and other issues. The financial performance of RRBs in India must therefore be studied. Even after 65 years of independence, 65% of the population still resides in rural areas. The strength of the rural sector is crucial to the growth of the rural economy. The Indian government has initiated and carried out a number of policy measures. However, poverty, a lack of access to clean water and sanitary services, subpar housing, high rates of illiteracy, and other comparable economic and social disadvantages continue to plague rural India. One of the fundamental engines of economic expansion is the banking sector. Given that it is a crucial link in numerous socioeconomic operations, it must be stable. The GOI established the Regional Rural Banks (RRBs) in 1975 in accordance with the requirements of the ordinance proclaimed on the 26th September 1975 with a view to thriving the rural economy. The share capital of RRBs was financed to a percentage of 50% by the Government of India, 15% by the relevant State Government, and 35% by the bank that sponsored the RRB. The RRBs can only operate in certain districts in a State that have been notified. The RRBs generally collect deposits from rural and semi-urban areas and lend money largely to small and marginal farmers, agricultural laborers, rural craftsmen, and other priority sector sectors. RRBs have more access to rural areas and are crucial to India's development of its rural areas and agriculture industry. The primary goals underlying the establishment of this sort of dynamic institution in India were to create a connection between rural households and banks, especially in banking-deficient areas. Additionally, to promote rural savings, create job possibilities, and offer more affordable loans to rural India's marginalized population.

Integrated development of inclusive finance and green finance promotes rural revitalization

In 2016, China put forward the topic of green finance and inclusive finance at the G20 Summit in Hangzhou. Since then, more and more scholars in China have paid attention to the possibility and influence of the integrated development of green finance and inclusive finance. In recent years, China has gradually established a domestic green financial market system through a series of measures such as issuing green financial standards, disclosure requirements and encouraging green financial product innovation. According to data from the National Statistical Bulletin, by the end of 2021, the loan balance of major rural financial institutions (rural credit cooperatives, rural cooperative banks, rural commercial banks) was 2.42496 trillion yuan, an increase of 2.6607 billion yuan compared with the beginning of the year. From the perspective of Liaoning Province, at the end of 2020, the balance of loans in domestic and foreign currencies of banking financial institutions in Liaoning was 520.94 billion yuan, an increase of 262.68-billion-yuan year-on-year, an increase of 5.3% year-on-year. The growth rate slowed down, with a decrease of 4.9 percentage points compared with the previous year. Firstly, we select a series of indicators and use entropy method to calculate the weight of each indicator. According to the analysis and processing of historical data, the quantization results of core explained variables, core explained variables and control variables are obtained. Descriptive statistics are made according to China Rural Statistical Yearbook and Peking University Digital China GSP Financial Index (2011-2020). Then, four spatial econometric models, namely spatial Dubbin model, spatial autoregression model, spatial correlation model and spatial error model, were applied to analyze the development relationship between digital inclusive finance and rural revitalization. Based on the evaluation system of rural revitalization, the development level of rural revitalization was obtained by combining the relevant data of 30 provinces in China from 2011 to 2021. Finally, the application of LR inspection, LM test to verify the reliability of the regression results, and considering the effect of partial differential decomposition method is used to the calculation results are decomposed, the weights in different space under the condition of digital Pratt & Whitney directly influence to the time of rural financial revitalization policy and policy space spillover effects, further analysis Pratt &Whitney financial relationship with the revitalization of the development of the rural.

Integrated development of inclusive finance and green finance promotes rural revitalization

In 2016, China put forward the topic of green finance and inclusive finance at the G20 Summit in Hangzhou. Since then, more and more scholars in China have paid attention to the possibility and influence of the integrated development of green finance and inclusive finance. In recent years, China has gradually established a domestic green financial market system through a series of measures such as issuing green financial standards, disclosure requirements and encouraging green financial product innovation. According to data from the National Statistical Bulletin, by the end of 2021, the loan balance of major rural financial institutions (rural credit cooperatives, rural cooperative banks, rural commercial banks) was 2.42496 trillion yuan, an increase of 2.6607 billion yuan compared with the beginning of the year. From the perspective of Liaoning Province, at the end of 2020, the balance of loans in domestic and foreign currencies of banking financial institutions in Liaoning was 520.94 billion yuan, an increase of 262.68-billion-yuan year-on-year, an increase of 5.3% year-on-year. The growth rate slowed down, with a decrease of 4.9 percentage points compared with the previous year. Firstly, we select a series of indicators and use entropy method to calculate the weight of each indicator. According to the analysis and processing of historical data, the quantization results of core explained variables, core explained variables and control variables are obtained. Descriptive statistics are made according to China Rural Statistical Yearbook and Peking University Digital China GSP Financial Index (2011-2020). Then, four spatial econometric models, namely spatial Dubbin model, spatial autoregression model, spatial correlation model and spatial error model, were applied to analyze the development relationship between digital inclusive finance and rural revitalization. Based on the evaluation system of rural revitalization, the development level of rural revitalization was obtained by combining the relevant data of 30 provinces in China from 2011 to 2021. Finally, the application of LR inspection, LM test to verify the reliability of the regression results, and considering the effect of partial differential decomposition method is used to the calculation results are decomposed, the weights in different space under the condition of digital Pratt & Whitney directly influence to the time of rural financial revitalization policy and policy space spillover effects, further analysis Pratt &Whitney financial relationship with the revitalization of the development of the rural.