Abstract:
This paper constructs a theory model to explain whether the relationship among different sectors in rural credit market is substitutive or complementary. Using a three-year panel data, this paper applies PSM-DID model to analyze the relationship among the poor village mutual fund, the formal financial sector and the informal financial sector in rural credit market. It's found that there exists substitutive relationship among these three financial sectors. The mutual fund substitutes for part of the informal financing. Especially, the substitutive relationship is much more significant in poor groups and in the situation of consumption lending. These findings provide some scientific basis to guide the development of the rural cooperative financial organizations and to improve the rural financial market to be more mutually complementary.
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