The Executives

Abstract

The growth rate of farmers’ income is relatively slow, and the income gap between urban and rural residents and regions continues to enlarge. The problems of agriculture, rural areas, and farmers are still serious in China, which needs to pay more attention to system innovation and reasonable policy adjustments. This study aims to determine the impact of microfinance on the asset scale, annual sales, annual net profit, and number of employees of small enterprises in rural areas. The hypothesis of the study would reveal if microfinance played a positive role in promoting the development of small rural enterprises. The researcher divided the overall sample into two groups: one group was the experimental group, that is, the enterprises that obtained bank loans (including general commercial banks and rural cooperative banks for about 60% of the total sample), and the other group was the control group, the enterprises that did not obtain any bank loans. A panel-data model was used to analyze the role of corporate lending on performance. A comparative study found that experimental and control groups after one year differed in the following factors: size of the assets, net profit, sales, fixed assets accounted for, possession of the land, enterprise, intangible assets, and age. Results show that bank loans have a significant positive impact on the performance of sample enterprises, such as the size of fixed assets, asset scale, net profit, and the number of employees, while non-bank loans have a certain difference in the performance of different indicators and even have a certain negative effect on some performance indicators. The government should strengthen policy guidance to help small and medium-sized enterprises (SMEs) strengthen their ability to resist risks and obtain loans, constantly innovate the financial system, and increase financial supply according to the change in their financial needs. This will promote the production increase of enterprises and the sustainable development of rural economies.

Keywords: Microfinance; Operations; Small business enterprise; Rural areas.