Enhancing stability and achieving high-quality development in rural credit cooperatives through inclusive finance: evidence from Shaanxi Province, China

The stability of rural credit cooperatives is closely linked to regional economic development in China’s vast rural areas. This study aims to investigate how rural credit cooperatives in China can enhance their stability and achieve high-quality development using panel data from 87 county rural credit cooperatives in Shaanxi Province from 2008 to 2016. The Cov-AHP is employed to build an evaluation system and the effect of inclusive finance on the risk-taking capacity of rural credit cooperatives is analysed using a fixed effects model. Results demonstrate that inclusive finance can improve the risk-taking capacity of rural credit cooperatives and enhance their stability. This effect is more significant for rural credit cooperatives with a larger share of corporate shares, although property rights reform and the launch of community banks may weaken this effect. This study recommends vigorously promoting the development of inclusive finance, improving the operational mode of rural commercial banks, strengthening the corporate governance system of rural credit cooperatives, and enhancing the level of financial services for agriculture, rural areas, and farmers. These implications are important for promoting the further reform of rural credit cooperatives, especially in developing countries.