Households’ indebtedness and borrowing behaviour in the natural village of Xiaobu
Unlike the economies of the natural villages of Yao and Wulitang, Xiaobu had already started the process of agrarian transformation towards modernization, specializing in the cultivation of orange and tangerine trees. This chapter first gives an explicit analysis of two issues relating to households’ formal borrowing in Xiaobu: their access to formal credit and the determinants of credit rationing by formal lenders; and their participation in the formal credit market, as well as the determinants of that participation. However, by considerating the extensiveness and popularity of one particular type of formal credit in Xunwu county – microcredit loans issued from the RCCs to rural households – which were different from the type of loans issued in Yao and Wuliang that mainly focused on normal loans – i.e. loans requiring collateral – the discussion of households’ indebtedness and borrowing behaviour in Xiaobu is mainly focused on microcredit. Next, in addition to the analysis of formal credit in Xiaobu, this chapter also presents a picture of households’ informal borrowing. In particular, as Xiaobu mainly specialized in the cultivation of orange trees, households’ borrowing in this village was largely dominated by loans for production. Therefore, analysis of informal credit in Xiaobu mainly focuses on loans for production purposes.