Improvement of Micro-credit's Sustainability and Farmers' Welfare: the Study on the Institutional Reformation of Rural Credit Cooperatives in China

Synopsis Since 1951, Rural Credit Cooperatives (RCCs) have played an important role in supporting the development of rural China. By the institutional reformation on 2000, RCCs’ got larger independency on management from the government, while they are now faced by some problems of sustainability caused by staffs’ inappropriate management and farmers’ ignorance about RCCs’ economic conditions. In this paper, we formulate a model to investigate how to increase RCCs’ sustainability as well as farmers’ welfare. It is found that with farmers’ decision making both on disaster mitigation and RCCs’ financial management, both RCCs’ sustainability and farmers’ long-term benefit are improved.