Research Sees Enormous Potential In China For Consumer Lending

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The enormous potential for consumer lending in China has been the subject of both academic papers and a conference commissioned by the Filene Research Institute.

"The government is studying the institutional infrastructure in other countries and especially in the United States, with an eye to determining how China might develop a consumer lending system that fits its economy," noted the Filene Research Institute.

The conference, led by Professor Bruce Reynolds of the University of Virginia, examined China's Rural Credit Cooperatives (RCCs), which are also located in urban areas and which originated before the revolution of 1949. "While these cooperatives do not have the same form as credit unions in the U.S., there is considerable potential for helping selected RCCs in some cities to develop in a manner similar to credit unions here, and to serve as models for other RCCs in China," Filene said.

According to Filene, the purpose of its project was to conduct research and communicate results to conference participants concerning the workings of the U.S. consumer credit system, the current Chinese consumer credit system, and the ways in which the Chinese system can be developed effectively. Filene said it has commissioned 13 papers on subsets of these issues by researchers in China, the U.S., Germany and Australia. In August 2004, researchers came together with about four-dozen academics, policy-makers, and practitioners, at a conference on consumer credit at Beijing University's China Center for Economic Research. The 13 papers commissioned were reviewed and discussed at the conference.

Among the key points discussed was what guidance might Chinese policy makers, academics and consumer lending practitioners gain from the U.S. experience in this sector?

"We believe the results of this project will have significant influence on Chinese policy-makers in two ways," says Bob Hoel, Filene Executive Director. "First, by helping to develop consumer credit; and second, by helping to develop the national infrastructure needed to support them."

The nonprofit Filene Research Institute examines vital issues affecting the future of credit unions and consumer finance. More than 1,500 credit unions, credit union organizations, and credit union executives are members of the Institute. The Institute is located in Madison, Wis., and works in cooperation with the Center for Credit Union Research at the University of Wisconsin-Madison.

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