Rural Supply and Marketing Cooperatives in China: Historical Development, Problems, and Reform
The historical development and performance of rural supply and marketing cooperatives (SMCs) in China are examined and linked to various reform periods. SMCs suffered a loss of focus on members as well as member control during several periods of reform and experienced declining financial performance during the most recent reform period. A number of factors related to this decline are presented, including ineffective reforms, lack of accountability and transparency, limited focus on member needs, a negative image for cooperatives, and poor understanding of contemporary cooperative management and governance practices.
The changing role of supply and marketing co-operatives in China
Supply and marketing co-operatives used to monopolize the entire rural distribution system in China. They purchased agricultural produce from and sold raw materials and consumer goods to peasants. However, their monopoly was threatened by the opening up of the rural economy during the economic reform. This article describes how, over the past decade, supply and marketing co-operatives have been undergoing rapid changes and have significantly outgrown their original role as rural distribution institutions. Now they provide comprehensive services such as transportation, storage, price information and technical assistance to peasants. They also help rural enterprises source raw materials and market finished products.
Measuring Economies of Scale and Scope in Agricultural Banking
Generally, empirical studies have used either duality theory with the estimation of cost functions or nonparametric estimation methods to assess efficiency in the financial services industry. The purpose of the present study is to estimate economies of scope and scale in agricultural banking. This will be accomplished through estimation of an indirect multi-product cost function. The uniqueness of this study, when compared to previous studies of efficiency of the financial services industry, is the disaggregation of the outputs so that agricultural lending can be evaluated. In addition, a normalized quadratic cost function is estimated with curvature properties imposed. Clark reviewed thirteen studies that measured economies of scope and scale for commercial banks, credit unions, and savings and loan associations. He found that they offered four broad conclusions: (a) overall economies of scale exist at low levels of input, (b) no consistent evid nce of economies of scope exists, (c) some evidence of cost complementarities exists, and (d) the results seem to be robust among financial institutions.