chapter  4
30 Pages

Households’ indebtedness and borrowing behaviour in the natural village of Yao

The natural village of Yao was characterized by large-scale animal husbandry, mainly duck-breeding, as well as the fact that is was fast becoming transformed into an industrialized economy. Following the idea of the segmentation of the rural financial market, this chapter first examines the characteristics of households’ borrowing from the formal financial institutions in Yao. In particular, through the discussion of two issues – households’ access to formal credit and the determinants of households’ credit rationing by formal lenders, and households’ participation in the formal credit market, as well as the determinants of households’ participation – this chapter presents a picture of both the supply-and demand-sides of the formal credit market in Yao. The study of the former issue aims to give an understanding of the performance of the formal financial institutions, specifically RCCs, in recent years, whereas the latter issue focuses more on the analysis of the pattern of credit demanded by households. Second, as an alternative to the formal credit market, this chapter analyses the characteristics of households’ borrowing from informal lenders in Yao. More specifically, farmers’ borrowing activities in the duck-breeding business is investigated in particular.