What Lenders Think Borrowers Think Of Lending And Lenders: A Psychographic Study Of Rural Credit Cooperatives In Shandong, China
In this paper we conduct a field survey among 120 loan officers at Rural Credit Cooperatives (RCCs) in China's coastal Shandong province, to pair with an existing survey on identical questions to 394 farm households in the same region. Pairing lenders' perceptions towards borrowers regarding RCC microcredit lending mechanisms, against borrowers' perceptions towards lenders and how they themselves were perceived by lenders in the same regard, we observe a perceptual disconnect between them in the context of lenders' "care" towards borrowers, loan rejection, memberships of RCC and group guarantee, lending concerns, cost of borrowing, reasons for default, credit rationing, and lending preferences. With distinct cluster groupings based on their perceptions, we analyze the influence of demographics on the borrower and lender cluster memberships. We draw conclusions that policy initiatives should be put in place at RCCs that close the gap between the two parties in their credit relationship, concentrating on advocating RCCs' care and trust towards agriculture and farm households, while providing credit education to rural households; at the institutional level, effort should be extended to train a dedicated team of loan officers that specialize in servicing farm households with standardized lending practices. This research provides financial institutions with outreach mechanisms to borrowers, while also training lenders to borrowers' sensitivities.
Microcredit; Perception; Disconnect; Cluster; Rural credit cooperative (RCC)
Turvey, Calum G.
Woodard, Joshua D.
M.S., Agricultural Economics
Master of Science
dissertation or thesis