Lynette H. Ong
- Published in print:
- 2012
- Published Online:
- August 2016
- ISBN:
- 9780801450624
- eISBN:
- 9780801465956
- Item type:
- chapter
- Publisher:
- Cornell University Press
- DOI:
- 10.7591/cornell/9780801450624.003.0002
- Subject:
- Political Science, Asian Politics
This chapter examines rural credit cooperatives (RCCs) in the context of China's rural financial landscape, with particular emphasis on their significance to the rural economy and households. China's ...
More
This chapter examines rural credit cooperatives (RCCs) in the context of China's rural financial landscape, with particular emphasis on their significance to the rural economy and households. China's rural financial system serves roughly 800 million people, who live in large swaths of hinterland in the central and western provinces and in rural and peri-urban locales in the eastern coastal provinces. Despite a diverse range of credit demands, the official rural financial sector has been largely monopolized by RCCs and, until the late 1990s, the state-owned Agricultural Bank of China (ABC). Since 1998, the ABC has been offering poverty alleviation loans at a subsidized interest rate to rural households in poor counties. This chapter first provides an overview of China's rural financial sector before discussing the importance of rural savings for rural households. It then considers township and village enterprises and the history of RCCs, along with the informal credit sector. It shows that the savings of rural households have been channeled to finance urban development, reflecting an inherent urban bias in China's development strategy.Less
This chapter examines rural credit cooperatives (RCCs) in the context of China's rural financial landscape, with particular emphasis on their significance to the rural economy and households. China's rural financial system serves roughly 800 million people, who live in large swaths of hinterland in the central and western provinces and in rural and peri-urban locales in the eastern coastal provinces. Despite a diverse range of credit demands, the official rural financial sector has been largely monopolized by RCCs and, until the late 1990s, the state-owned Agricultural Bank of China (ABC). Since 1998, the ABC has been offering poverty alleviation loans at a subsidized interest rate to rural households in poor counties. This chapter first provides an overview of China's rural financial sector before discussing the importance of rural savings for rural households. It then considers township and village enterprises and the history of RCCs, along with the informal credit sector. It shows that the savings of rural households have been channeled to finance urban development, reflecting an inherent urban bias in China's development strategy.
Lynette H. Ong
- Published in print:
- 2012
- Published Online:
- August 2016
- ISBN:
- 9780801450624
- eISBN:
- 9780801465956
- Item type:
- chapter
- Publisher:
- Cornell University Press
- DOI:
- 10.7591/cornell/9780801450624.003.0003
- Subject:
- Political Science, Asian Politics
This chapter examines the institutional design of rural credit cooperatives (RCCs) and whether it influences patterns in their lending. Drawing on the results of a household survey, it considers the ...
More
This chapter examines the institutional design of rural credit cooperatives (RCCs) and whether it influences patterns in their lending. Drawing on the results of a household survey, it considers the factors that shape loan officers' behavior and affect the loan allocation process. Although not part of the state bureaucracy, RCCs are subject to a dual accountability system similar to that of any subnational bureau in China. Comparison of RCCs' line of reporting and supervisory structure with that of state-owned banks such as the Agricultural Bank of China and the People's Bank of China further illustrates why credit cooperatives are more susceptible to local-government influence. This chapter first discusses existing explanations for the rural credit sector outcome, particularly bias in lending toward local government-owned enterprises. It then provides an overview of RCCs' corporate governance structure and explains why China's banking regulator cannot supervise RCCs effectively. Finally, it analyzes lending patterns by rural cooperative foundations.Less
This chapter examines the institutional design of rural credit cooperatives (RCCs) and whether it influences patterns in their lending. Drawing on the results of a household survey, it considers the factors that shape loan officers' behavior and affect the loan allocation process. Although not part of the state bureaucracy, RCCs are subject to a dual accountability system similar to that of any subnational bureau in China. Comparison of RCCs' line of reporting and supervisory structure with that of state-owned banks such as the Agricultural Bank of China and the People's Bank of China further illustrates why credit cooperatives are more susceptible to local-government influence. This chapter first discusses existing explanations for the rural credit sector outcome, particularly bias in lending toward local government-owned enterprises. It then provides an overview of RCCs' corporate governance structure and explains why China's banking regulator cannot supervise RCCs effectively. Finally, it analyzes lending patterns by rural cooperative foundations.
