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Being Excluded or Having No Use for: Adoption of Financial Services in Pingwu County China

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DOI: 10.25236/edssr.2020.063


Yilin Li, Zhenfa Li

Corresponding Author

Zhenfa Li


It is a common situation that rural residents in China do not use financial services. However, it remains unclear that it is that they do not need such services, or they are excluded by financial institutions. Based on an empirical focus on Pingwu, a deprived county in the western region of China, we examine the adoption of financial services of farmers, self-employed individuals or households (SEs) and township and village enterprises (TVEs) and try to explain the reasons from the initiative attitudes of these groups and behaviours of financial institutions. We find that most farmers do not need to use financial services except basic saving accounts. They can meet the financing requirements for the agricultural activities by the savings and cash they hold. As for the SEs, most of them do need to adopt financial services, mainly loans. Because of the limited amount, banks normally lend them money willingly. SEs usually have a stable income stream throughout the year and would repay the loan on time as soon as they earn money. However, the TVEs are more likely to be rejected by banks. They often need a large amount of funds that much more than their value of assessment while they cannot provide qualified collaterals and there are often problems with management, business patterns and others that limit their development. In this situation, banks concerns that TVEs cannot repay the loan on time.


Financial exclusion, Demand for financial services, Farmers, Ses, Tves