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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
Author(s)
Yalin Yuan, Mitsuyasu Yabe
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DOI:10.17265/1537-1514/2013.03.002
Affiliation(s)
Yalin Yuan, Ph.D. candidate, Department of Agricultural and Resource Economics, Graduate School of Bioresource and Bioenvironmental Sciences, Kyushu University; College of Economics and Management, Northwest A&F University.
Mitsuyasu Yabe, Professor, Department of Agricultural and Resource Economics, Faculty of Agriculture, Kyushu University.
ABSTRACT
Based on a survey of 897 farming households in Shaanxi and Gansu provinces, our results show that while farming households had high demands for capital, 47.7% have experienced having their application for a Rural Credit Cooperative (RCC) loan denied because of their low income. Agricultural production and income are significantly influenced by weather risks, and agricultural income accounts for the majority of farming households’ annual income, especially poorer households. Furthermore, in Gansu province, fluctuations in traditional crop yields and income caused by weather risks were higher than fluctuations in Shaanxi province. To improve the confidence of formal financial institutions to loan to farming households and to stabilize agricultural production and income, this research combined both formal financing and weather insurance to produce a new product, and analyzed the level of farming households’ interest in this new product and its influence factors, 51.1% of the farming households were interested in this product. Overall, agricultural acreage and debt showed a negative influence on farming households’ interest. Farming households in Gansu were more concerned with the distance between their village and the RCC office, while farming households in Shaanxi province stated that too long a RCC loan approval period reduced their interest in the product.
KEYWORDS
formal financing, weather risks, new loan product, new weather insurance product, ordinal regression model, northwest China
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