TITLE:
Rural Household’s Risk Attitude and Credit Rationing: The Case of Chongqing in China
AUTHORS:
Xinjun Pang, Yunwu Kuang, Xiaohong Gong
KEYWORDS:
Risk Attitude, Credit Rationing, Risk Cost, Chongqing
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.4 No.12,
December
9,
2014
ABSTRACT: This paper identifies farmers’ risk
attitude through ELCE method and problem design that conducts a survey of 237
rural households in Chongqing Municipality, and empirically studies the
relationship between risk attitudes and credit rationing by utilizing Probit
and Logit model. The results show that farmers’ risk attitude and credit
rationing are a significant positive correlation. The stronger farmers’ risk
aversion is, the more serious the demanded credit rationing becomes. Risk
attitude which is determined the risk cost and risk premium, thus affects the
credit behavior and credit rationing degree. In addition, distance of peasant’s
residence away from the city and their land amount have a positive significant
influence on credit rationing, while the factors, such as farmers’ education
level, income, family labor force, have a negative significant effect on credit
rationing. Based on these findings, the paper further analyzes the relationship
between farmers’ credit using and credit rationing to farmers with different
risk attitudes. Measures to relieve the farmer’s credit rationing must be taken
from government, financial institutions and farmers respectively.