Has the Restructuring of Rural Credit Cooperatives into Rural Commercial Banks Reduced Their Efficiency in Serving Agriculture and Famers? - Evidence from Sichuan Province

Abstract This research studies whether Rural Credit Cooperatives (RCCs), the mainstay of agricultural financial service providers in Sichuan Province, a typical agricultural province in China, have improved their efficiency in supporting agriculture due to their restructuring into Rural Commercial Banks (RCBs). The research select 12 RCBs restructured in Sichuan province before 2017 as samples and 10 RCCs as the control group. Based on data from institutional surveys and their annual public report, the research uses the DEA's BCC model and the Malmquist-DEA index to analyse the static and dynamic efficiency of the sample RCBs and RCCs. The research aims to identify the banks' proportion of farm-related loans to total loans, the average loan amount for farm households and the average amount of loans to agriculture-related enterprises and organisations as agricultural commercial bank's outputs indicators to measure their efficiency in supporting the agribusiness and the farmer. The result shows that the static and dynamic agricultural support efficiency of most RCBs is generally higher than RCCs, and the fluctuation of the static agricultural support efficiency of county-level RCBs is smaller than that of city-level RCBs. Restructuring RCCs into RCBs improved the efficiency of agricultural support of the primary agricultural financial service providers in Sichuan province. The research does not find the mission drift of both RCCs and RCB in this typical agricultural province.