ZHANG Zhengping;XIA Hai;MAO Xuefeng
Chinese Rural Economy,2020,No. 09
In recent years, the provincial association pattern (hereinafter, provincial rural credit cooperatives association is referred to as provincial association) are widely criticized. The provincial association’s intervention with rural credit institutions (namely, rural credit cooperatives, rural commercial banks, and rural cooperative banks) has become almost a target of public criticism, and all walks of life more and more call for taking out the provincial association. However, the empirical research on provincial association and its role is almost blank. Is the provincial association pattern really nothing? As another round of transformation on rural credit cooperatives approaches, this paper, in order to re-examine the role of the provincial association, uses textual analysis to measure the level of provincial association’s intervention and tests the impact of the provincial association on the credit behavior and profitability of rural credit institutions. First of all, this paper defines the provincial association’s intervention as the behavior of influencing the operating activities of rural credit institutions by means of various ways such as personnel appointment, giving management target, setting business access, making development plans, and establishing business example. On this basis, this paper adopts the LDA subject classification model to carry out the textual analysis regarding the news on the websites of Chinese 24 provincial associations, and then extracts seven subjects related to the business and development of rural credit institutions. In addition, this paper quantitatively depicts the focus of provincial association on rural credit institutions’ businesses such as agriculture-related loans, small and micro-loans, and poverty-relief loans. Then, by means of the entropy weight method, this paper has weighted the constructed agriculture-related loan concern index, poverty-relief loan concern index, small and micro-loan concern index, and credit risk concern index of provincial association to obtain the provincial association credit business concern index. Finally, this paper takes the provincial association credit business concern index as a proxy variable for the level of the provincial association’s intervention. Based on the unbalanced panel data of 432 rural credit institutions (349 rural commercial banks, 81 rural credit cooperatives, and two rural cooperative banks), this paper adopts the bidirectional fixed effects model to empirically test the impact of the provincial association’s intervention on rural credit institutions’ credit scale (loan balance), credit orientation (agriculture-related loan balance and small and micro-loan balance), and profitability (return on equity). The research results are as follows. The intervention of provincial association has promoted the expansion of credit scale and the increase of agriculture-related loans and small and micro-loans, but significantly reduced the profitability of rural credit institutions. In addition, the increase in the ratio of the primary industry output has strengthened the impact of the provincial association’s intervention on credit scale, agriculture-related loan scale, and return on equity, but inhibited the positive impact on small and micro-loan scale. To control the endogenous problem caused by causal relationships and omitted variables, this paper takes the mean of the intervention level of neighboring provincial associations as the instrumental variable of the local provincial association’s intervention level to make a two-stage estimation, and the estimation results are consistent with the benchmark regression results. At the same time, this paper takes the growth of loan balance as the proxy variable of credit scale, takes the ratio of agriculture-related loan, the growth of agriculture-related loan, and the ratio of small and micro-loan as the measurement indexes of credit orientation, and takes the return on total assets, instead of the return on equity, as the explained variable to make the robustness test. The estimation results are also consistent with the benchmark regression results. In the further mechanism study, this paper uses the mediating effect model to test the internal relationship among the intervention of provincial association, the credit behavior of rural credit institutions, and the institutions’ profitability, that is, whether the intervention of provincial association has an impact on the profitability of rural credit institutions by affecting the credit behavior of rural credit institutions. The empirical results show that there are two ways to influence the profitability of rural credit institutions through the intervention of provincial cooperatives: one is through the credit scale of rural credit institutions; and the other is through the credit orientation of rural credit institutions (agriculture-related loans and small and micro-loans). The research conclusion has important enlightenment for the new round of reform on Chinese rural credit cooperatives, especially the reform on the provincial association. In the short term, we should encourage the positive role of provincial association. However, in the long term, we must keep reforming towards the de-administration, and adhere to the reforming principle of adjusting measures to local conditions, avoiding the one-size-fits-all action. In other words, we should promote the reform on provincial association based on the specific circumstance of various provincial regions and the development of local rural credit institutions. Finally, the empirical research of this paper not only deepens the understanding of the function and impact of the provincial association, but also helps to further unity or harmonize the two opposing theories regarding the government’s involvement in the financial markets. The research conclusions not only offer evidence to the political theory of the government participating in the financial markets (the impact of provincial association’s intervention on the profitability of rural credit institutions), but also make an effective supplement to the development theory (the impact of provincial association’s intervention the credit behavior of rural credit institutions), providing a new perspective for the future theoretical research.
