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Attitudinal Asymmetries and the Lender-Borrower Relationship: Survey Results on Farm Lending in Shandong, China

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  • Calum Turvey
  • Xiaolan Xu
  • Rong Kong
  • Ying Cao

Abstract

This paper addresses the problem of social interactions and the lender-borrower relationship by measuring the disconnect between borrowers and lenders across a wide range of lending-related attributes. The degree by which lenders and borrowers connect disconnect depends on whether lenders’ and borrowers’ perceptions across these attributes are symmetric or asymmetric. We compare field survey results from 120 loan officers at Rural Credit Cooperatives (RCCs) in China’s coastal Shandong province, and pair them with an existing survey on identical questions to 394 farm households in the same region. Pairing lenders’ perception towards borrowers regarding RCC microcredit lending mechanism, against borrowers’ perception towards lenders and how themselves were perceived by lenders in the same regards, we observe on many dimensions a disconnect between them in the context of lenders’ “care” towards borrowers, loan rejection, memberships of RCC and group guarantee, lending concerns, cost of borrowing, reasons for default, credit rationing, and lending preferences. This research provides financial institutions with outreach mechanisms to borrowers, while also training lenders to borrowers’ sensitivities. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Calum Turvey & Xiaolan Xu & Rong Kong & Ying Cao, 2014. "Attitudinal Asymmetries and the Lender-Borrower Relationship: Survey Results on Farm Lending in Shandong, China," Journal of Financial Services Research, Springer;Western Finance Association, vol. 46(2), pages 115-135, October.
    • Handle: RePEc:kap:jfsres:v:46:y:2014:i:2:p:115-135
    DOI: 10.1007/s10693-013-0171-5
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    Cited by:

    1. Römer, Ulf & Weber, Ron & Mußhoff, Oliver & Turvey, Calcum G., 2017. "Truth and consequences: Bogus pipeline experiment in informal small business lending," DARE Discussion Papers 1702, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    2. Atanas Kolev & Laurent Maurin & Matthieu Segol, 2022. "What Makes Firms Dissatisfied with Their Bank Loans: New Evidence from Survey Data," Journal of Financial Services Research, Springer;Western Finance Association, vol. 61(3), pages 407-430, June.

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    More about this item

    Keywords

    Lender-Borrower Relationship; Asymmetric Information; Relationship Lending; Rural credit cooperative (RCC); Agricultural Finance; G2; Q14;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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