Research on the Crowding Out Effect of Microfinance Institutions:Based on the Survey Data of Farmers in Six Provinces
In recent years,microfinance institutions(MFIs)have gradually become an impor-tant supplement to the rural financial system of developing countries.Based on the survey data of rural households in six provinces,this paper empirically analyzes the relationship between microfi-nance institutions and informal credit after entering the rural financial market and its impact on the interest rate of the informal credit market.The results show that after MFIs enter the market,infor-mal credit will be crowded out,and this crowding out effect is mainly reflected in farmers with high assets,high income and in non-poor areas,which can reduce the dependence of these farmers on informal loans with high interest rates,thus incorporate them into the formal financial system.Sim-ultaneously,with the expansion of microfinance institutions,the interest rate in the informal credit market will increase because the structure of customer changes,i.e.,MFIs have skimming effect.This research has important policy implications for improving the rural financial service sys-tem.When the government developing inclusive finance and guiding more financial institutions to serve rural areas,it needs to correctly understand the role of different financial institutions in the rural financial market system and the marginal impact of incremental rural financial institutions,especially on the welfare of non-target customers.
MicrofinanceInformal creditInterest rateCrowding out effectRural financial system
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