The availability of credit has long occupied a central place in development strategies. Rural credit institutions are more than an instrument of intermediation, they also handle risk, mobilize and disseminate information about market and technology. Given the informational problems and innate disadvantages of rural credit markets, the rationale for laissez-faire and liberalization is by no means based on a sound understanding of the state’s role in redressing market failures. This study examines the rural credit market in China, its impacts on agricultural transformation and the state’s role in the functioning of markets. The particular objectives are to identify the determinants of credit rationing in both formal and informal sectors, to show the extent of credit rationing, to reveal the dynamic role of institutional lending in agricultural transformation, and to understand the challenges in developing efficient institutions.

The Author: Xiangping Jia worked as a doctoral researcher at the Department for Rural Development Theory and Policy at the University of Hohenheim (Germany) from 2004 to 2008. In 2008 he received a Ph.D. in Agricultural Economics from this university. He conducted research in the fields of rural credit access, land property rights and tenure security, agricultural technology and rural institutions.