Community Development Funds: A New Vehicle for Poverty Alleviation in China? 1

Abstract

Disappointed with the performance of poverty loans and the rural financial system in targeting the poor communities and households, the Chinese Government is currently piloting community development funds (CDFs) as an alternative instrument for poverty alleviation and development in China. This paper examines the development of CDFs in the last decade and draws lessons for the government led CDF programs. the focus of this study is on the innovations employed by the CDFs for poverty targeting and risk management and the key challenges faced by the CDFs in China.

Get full access to this article

View all access options for this article.

References

Abraham

Anita

and Platteau, Jean-Philippe (2002) “Participatory Development in the Presence of Endogenous Community Imperfections”, Journal of Development Studies, Vol. 39, No. 2, pp. 104–136.

Adams, D.W. and Canavesi de Sahonero (1979) “Rotating Savings and Credit Associations in Boliva”, Savings and Development, Vol. 3, No. 2, pp. 85–92.

Asian Development Bank (ADB) (1990) “Informal Finance in Asia”, in Asian Development Outlook 1990, Manila.

Ardener

(1964) “The Comparative Study of Rotating Credit Associations”, Journal of Royal Anthropological Institute, Vol. 94, No. 2, pp. 201–228.

Bardhan

and Mookherjee

(2000) “Corruption and Decentralization of Infrastructure Delivery in Developing Countries”, IED Discussion Paper Series, N° 104, Institute of Economic Development, Boston University.

Biggs

T.F.

Snodgrass

D.R.

and Srivastava

(1991) “On Minimalist Credit Programs”, Savings and Development, Vol. 15, No. 1, pp. 39–51.

Boucher

Guikinger

and Trivelli

(2005) “Direct Elicitation of Credit Constraints: Conceptual and Practical Issues with An Empirical Application to Peruvian Agriculture”, http://www.agecon.ucdavis.edu/

Bouman

F.J.A

. (1995) “ROSCA: on the Origin of the Species”, Savings and Development, Vol. 19, No. 2, pp. 117–147.

Callier

(1990) “Informal Finance: the Rotating Saving and Credit Association: An Interpretation”, KYKLOS, Vol. 43, No. 2, pp. 273–276.

10.

Chambers

(1983) Rural Development: Putting the First Last, Longman, London.

11.

Chase

R. S

. (2002) “Supporting Communities in Transition: the Impact of the Armenian Social Investment Fund”, World Bank Economic Review, Vol. 16, No. 2, pp. 219–40.

12.

Cheng

(2004) “Gansu Sustainable Rural Livelihoods Project: Microfinance Report”, World Vision Australia, for New Zealand Aid.

13.

Cheng

(2007) “The Demand for Microcredit as a Determinant for Microfinance Outreach: Evidence from China”, Savings and Development, forthcoming.

14.

Conning

and Kevane

(1999) “Community Based Targeting Mechanisms for Social Safety Nets”, mimeo, Department of Economics, Santa Clara University, California.

15.

Cornia

A. G

. 1999. “Social Funds in Stabilization and Adjustment Programmes”, United Nations University and World Institute for Development Economics Research, Helsinki.

16.

Cornia

A. G.

and Reddy

(2000) “The Impact of Adjustment-related Social Funds on Distribution and Poverty”, Manuscript, UNU-Wider, Helsinki.

17.

DeLancey

M.W

. (1978) “Savings and Credit Institution and Redistribution of Savings among Migrants”, The Journal of Developing Areas, Vol. 12, pp. 209–224.

18.

Food & Consumer Products of Canada (FCPC) (2007) “Poor Community Mutual Help Fund Operations Manual (Draft)”, Totonto, October.

19.

Galasso

and Ravallion

(2000) “Distributional Outcomes of a Decentralized Welfare Program”, mimeo, the World Bank, Washington.

20.

Geertz

(1962) “The Rotating Credit Association: A ‘Middle Ring’ in Development”, Economic Development and Cultural Change, Vol. 10, No. 3, pp. 241–263.

21.

Hoddinott

Adato

Besley

and Haddad

(2001) “Participation and Poverty Reduction: Issues, Theory, and New Evidence from South Africa”, FCND Discussion Paper No. 98, International Food Policy Research Institute, Washington D.C.

22.

Hospes

(1992) “People That Count: the Forgotten Faces of Rotating Savings and Credit Associations in Indonesia”, Savings and Development, Vol. 16, No. 4, pp. 371–401.

23.

Isham

and Kaehkoenen

(1999) “What Determines the Effectiveness of Community-Based Water Projects? Evidence from Central Java, Indonesia, on Demand Responsiveness, Service Rules, and Social Capital”, World Bank, Environmentally and Socially Sustainable Development Network, Washington D.C.

24.

Isham

and Kaehkoenen

(2002) “Institutional Determinants of the Impact of Community-Based Water Services: Evidence from Sri-Lanka and India”, Economic Development and Cultural Change, Vol. 50, pp. 667–691.

25.

Izumida

(1992) “The Kou in Japan: A Precursor of Modern Finance”, in D.W. Adams, and Fitchett

D.A.

(eds), Informal Finance in Low-Income Countries, Westview Press, Boulder, pp 165–180.

26.

Jian

Liu

and Liu

(2007) “How to Help the Poor More Effectively: the Lessons from the Trickle Up Program in Caohai”, 30May2007, at www.ccd.org.cn.

27.

Jiang

Xuzhao

(1996) China Informal Finance Studies: Zhongguo Minjian Jinrong Yanjiu Jinan, Shandong Renmin Publishing House.

28.

Khwaja

(2004) “Is Increasing Community Participation Always a Good Thing?”, Journal of the European Economic Association, April-May, pp. 427–436.

29.

Katz

and Sara

(1997) “Making Rural Water Supply Sustainable: Recommendations from a Global Study”, Water and Program

Sanitation

, Washington D.C.

30.

Kunshan Village Development Association (2007) “Village Fund Operational Manual”, unpublished document, Kunshan.

31.

Light

I.H.

and Bonachiche

(1988) “Immigrant Entrepreneurs: Koreans in Los Angeles 1965–1982”, University of California Press, Berkeley.

32.

Liu

Minquan

, Jiantuo

and Xu

Zhong

(2006) Zhongguo Nongcun Jinrong Shichang Yanjiu, Renmin University, Beijing.

33.

Liu

Shengan

and Gibson

Dan

(2007) “Community-Driven Development Pilot Project Program Operations Manual”, Foreign Capital and Project Management Centre, State Council Leading Group Office of Poverty Alleviation and Development, World Bank.

34.

Liu

Huang

and Cheng

(2007) ‘Micro-credit Changing from Targeting the Poor to Targeting the Rich, Description and Theoretical Explanation: Based on a Survey to Farmers Households in Micro-credit Projects Implemented Areas of Three Provinces’, Chinese Rural Economy, Vol. 8, No. 272, pp. 23–34.

35.

Lustig

(1997) “The Safety Nets Which Are Not Safety Nets: Social Investment Funds in Latin America”, Note prepared for the conference on Governance, Poverty Eradication, and Policy

Social

, Harvard University, Boston, November 12–13.

36.

Mansuri

and Rao

(2004) “Community-Based and -Driven Development: A Critical Review”, The World Bank Research Observer, Vol. 19, No. 1, pp. 1–39.

37.

Morduch

(1999) “The Microfinance Promise”, Journal of Economic Literature, Vol. 37, December, pp. 1569–1614.

38.

Narayan

(1998) “Participatory Rural Development”, in Lutz

Binswanger

Hazell

and McCalla

, (eds), Agriculture and the Environment, World Bank, Washington D.C.

39.

Ostrom

Lam

and Lee

(1994) “The Performance of Self-Governing Irrigation Systems in Nepal”, Human Systems Management, Vol. 13, No. 3, pp. 197–207.

40.

PADO (2006) “An Announcement for Launching Poor Village Development Mutual Help Fund Pilot”, May.

41.

Paxson

and Schady

(2002) “The Allocation and Impact of Social Funds: Spending on School Infrastructure in Peru”, World Bank Economic Review, Vol. 16, No. 2, pp. 297–319.

42.

Platteau

J. P

. (2000) Institutions, Social Norms and Economic Development, Harwood Publishers.

43.

Qingbaijiang District Financial Bureau at Chengdu City of Sichuan Province (2003) “Make an Effort to Collect the Agricultural Support Revolving Fund”, Rural Fiscal and Accounting Management [Nongcun Caizheng Yu Cai Wu], Vol. 2.

44.

Seibel

H. D.

and Schrader

(1999) “Dhikuti Revisited: From ROSCA to Finance Company”, Savings and Development, Vol. 23, No. 1, pp. 47–55.

45.

Stewart

and van der Geest, W. (1994) “Adjustment and Social Funds: Political Panacea or Effective Poverty Reduction?”, Employment Papers 2, ILO, Geneva.

46.

Stiglitz

J. E.

and Weiss

(1981) “Credit Rationing in Markets with Imperfect Information”, The American Economic Review, Vol. 71, No. 3, pp. 393–410.

47.

Tendler

(2000) “Why Are Social Funds So Popular?”, in Yusuf

et al. (eds), Local Dynamics in the Era of Globalization, Oxford University Press for the World Bank, New York.

48.

Van den Brink

and Chavas

J.P.

,(1997) “The Microeconomics of an Indigenous African Institution: the Rotating Savings and Credit Associations”, Economic Development and Cultural Change, Vol. 45, pp. 745–772.

49.

World Bank (2002) “Social Funds, Assessing Effectiveness”, the World Bank, Washington D.C.

50.

World Bank TCC5 Expert Team (2007) “Village Mutual Help Fund Survey Report”, October 2007.

51.

Guobao

(2001) “Research on China's Microfinance”, paper prepared for the China Foundation for Poverty Alleviation.

52.

Yongsheng County Development Association Micro-Revolving Fund Management Manual (n.d.) unpublished manual.

53.

Zhang

Lei

(2007) The Evolution of Poverty Reduction Policies in China 1949–2005, China Finance and Press

Economics

, Beijing.