The design and successful implementation of financial reforms depend on a thorough understanding of the financial market and, in particular, an understanding of the demand for credit by peasant households, the use of funds, the acceptability of interest rates and knowledge of the sources, both formal and informal, of credit supply. The present analysis is based on our investigation in January 2002 of 472 peasant households in two administrative villages in Xichong County in Sichuan Province. It focuses on peasant households with differing economic circumstances with respect to (1) credit supply and the ability to obtain credit; (2) participation in the credit market; (3) use of credit funds; and (4) income structure and demand for credit.
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