The crux of farmers 'loan difficulties

The difficulty of farmers' loans has existed for a long time, and it is an old problem. To be fair, it is not the inaction of the Government that has dragged on today. On the contrary, the Government has taken great pains. So is the bank biased against farmers? Of course not. Policy banks aside, commercial banks are in business, and naturally they will not be close or close to the object of the loan. Since the government attaches great importance to it and the banks are unbiased, what is the crux of the difficulty in financing for farmers?

There are different opinions on the explanation of this phenomenon in academic circles nowadays. The mainstream view is that there are few rural financial institutions, which can not meet the financing needs of farmers. To put it bluntly, this view is that as long as more financial institutions are set up in rural areas, the difficulty of farmers' loans can be easily solved. Coincidentally, I happen to have a research report on hand, saying that a city in southwest China has 27 banks and 63 non-bank financial institutions with the support of the central bank, covering 173 townships. As a result, it is said that it is no longer difficult for local farmers to obtain loans.

I didn't go to the local area for research. I believe what the report says is true. However, I have a question: is it because of the large number of financial institutions or other reasons that local farmers' loans are no longer difficult? So when I ask this question, what I think of is that it is difficult for small and medium-sized enterprises to borrow money. As we all know, at present, most of China's banking institutions are concentrated in cities, and there are many, but why is it difficult for urban small and medium-sized enterprises to make loans? It can be seen that the difficulty of loans does not focus on the number of banking institutions. If credit resources are scarce, no matter how scared the banks are, it will not help.

A similar example is the Spring Festival train ticket. For example, the market needs 1 million tickets, but the railway can only supply 800000 tickets. What if there is a shortfall of 200000 tickets? The suggestion we heard most was to increase the number of ticket outlets (or buy tickets under real names), and the railway companies did so. What's the effect? Needless to say, as long as the supply of tickets does not increase, only increasing the number of ticket outlets (or real-name ticket purchases) will undoubtedly cure the symptoms rather than the root of the problem, and in the end, 200000 people will not be able to buy tickets. In fact, the difficulty of financing for farmers is also the same. if you do not increase the supply of credit, you will run the bank to the door of the farmer's house, and the farmer will not be able to borrow money. Do you believe it?

Of course, it does not mean that farmers will be able to get loans by increasing the supply of credit, that is only one aspect; in fact, there are more complicated factors behind the difficulty of farmers' loans. A few years ago, there was excess liquidity in China, which showed that banks were not short of money, but at that time, farmers still had no way to apply for loans. Although credit funds have tightened in recent years, banks have been making loans every day. What is puzzling is why some people can borrow money from the bank while farmers find it difficult to reach the sky. Is it true that banks discriminate against farmers? I don't think so.

The difficulty of farmers' loans can be analyzed from two aspects. First from the bank, said that the bank is an enterprise, but not an ordinary enterprise. The difference is that general enterprises operate material goods, and when selling goods, ownership and the right to use are transferred at the same time, while banks operate money, which only transfers the right to use but not ownership. Why not transfer ownership? Because the loan money comes from depositors (deposits), the bank has no ownership. In other words, credit funds are borrowed by banks from depositors and have to repay principal and interest in the future, which is why banks should put "safety" in the first place.

And then from the financing point of view. There are two kinds of financing: direct financing and indirect financing, the former issues stocks or bonds, the risk is borne by investors, while the latter is through bank loans, the risk is borne by banks. Here is the problem: how can a Basel bank take too much risk with a capital adequacy ratio of only 8 per cent? Because of this, indirect financing has specific institutional arrangements. One of the important points is that borrowers must have asset collateral. Come to think of it, indirect financing originally means that the borrower has his own assets, but the form of the assets does not match the demand (if there is real estate but cash is needed).

Thus it can be seen that asset mortgage is the premise of indirect financing. But don't get me wrong, not all loans need to be mortgaged. A bank also borrows deposits from depositors, but it does not need to be mortgaged. Why? Because bank borrowing from depositors is equivalent to issuing bonds, which is direct financing. Strictly speaking, only borrowing through intermediaries is indirect financing. For example, farmers' loans to banks are typical. Since it is indirect financing, it is necessary to have asset collateral. It is in this sense that for many years I have believed that the crux of farmers' loan difficulties does not lie in banks, but in their lack of asset collateral.

Yes, banks are not charities and cannot be risk-averse, which not only cannot be changed now, but also cannot be changed in the future. Extended to the policy level, its meaning is to solve the problem of difficult loans for farmers, do not expect banks to change the rules, but to try to let farmers have asset collateral. Is that possible? Everything is man-made, and of course there is a possibility. In fact, today's farmers are not destitute, they have assets: at least homestead is an asset, housing is also an asset. The question is, why don't farmers use them as collateral when they have assets?

A few days ago, I saw a secretary of the county party committee. According to him, among the homestead use rights, housing ownership rights, land contract rights and woodland contract rights currently owned by farmers, the current law only allows "forest rights" to be mortgaged. and the property Law and the guarantee Law clearly stipulate that homestead shall not be mortgaged. When the law provides for this, it is not clear why the legislators intended to do so. Recently, I checked the literature and saw an official authority figure explaining that the main idea is that the right to contract land, homestead and housing cannot be mortgaged, while the right to contract woodland can be mortgaged because the former is a necessity for farmers, while the latter is not.

This explanation sounds reasonable, but when I think about it, it is not. My question is, why can't necessities be used as collateral? Mortgage as a kind of risk constraint, the more important the collateral, the stronger the risk binding force. Besides, urban housing is also a necessity, and city dwellers can be used as mortgages. Why can't farmers? Some people may say that it is a precaution to prevent farmers from being displaced in the future. Although this worry is understandable, I think it is unfounded. You know, it is one thing for the law to allow mortgages, and another for farmers to use them. Farmers are not stupid, what makes you think that farmers will mortgage their assets regardless of the consequences?

The so-called equality before the law means that everyone has to abide by the law, and no matter who it is, the king of heaven and Laozi should also be punished for breaking the law; another meaning is that the law should protect the equal rights of citizens. Specifically, as far as bank loans are concerned, it is not necessary to listen to the opinions of farmers and give them the right of choice as to whether farmers' assets can be used to mortgage others.