Since its introduction in Bangladesh in the seventies, microcredit has been well
documented to have social implications such as reducing poverty and empowering the
poor by offering them opportunities to access economic resources. Microcredit was
introduced into China in the mid-1990s, aiming to facilitate credit access by farmers
and mitigate rural poverty in China. However, the impacts of microcredit on China
rural households’ livelihoods are not well documented. In addition, despite the efforts
made by the Chinese government to support and popularise the implementation of
microcredit, the access to institutional credits including microcredit by the rural
population remains insufficient.
This research assesses the impacts of microcredit on household welfare (measured by
income and consumption) and women empowerment in rural China. In addition, it
examines the key factors that influence the accessibility of microcredit by rural
households in China. The impact of microcredit on household welfare is estimated
using the difference-in-difference approach and logistic regression is employed to
analyse the accessibility to microcredit by Chinese rural households and the women’s
empowerment impact of microcredit respectively. Both primary and secondary data
are used in the empirical analyses: primary data are collected through a household
survey using a structured questionnaire; secondary data are obtained from the Rural
Credit Cooperative, the largest microcredit provider in China.iii
The results support the wide belief in the literature that microcredit can significantly
improve the households’ welfare such as income and consumption. The results also
reveal that microcredit has a significant impact on five different dimensions of women
empowerment ranging from economic security (i.e., control of financial resources) to
awareness of social/legal issues (e.g., rights to protest against domestic abuse,
minimum legal marriage age, etc). Furthermore, a total of twelve household-related
factors (e.g., household income, family size) are identified as key factors influencing
households’ accessibility to microcredit. Despite the optimistic findings on how
microcredit has changed the rural households’ lives, the results show that the vast
majority of the programme participants are non-poor, which casts some doubts on the
social potential (such as poverty reduction) of China’s microcredit programmes.