Although social capital is commonly believed to affect cooperative financing, empirical results are sparse. Using data from surveys of members of 60 cooperatives in Fujian province, China, this study shows that social capital is related to cooperative financing performance, interpreted as (1) members’ willingness to provide equity, (2) loans from members and from banks, and (3) cooperatives providing financing services to members. Three dimensions of social capital are identified; external, relational, and cognitive. The findings indicate that Chinese cooperatives obtain bank credit more easily if they have been granted government “honors” and if the chairperson has government contacts (external social capital). Loyal members (relational social capital) are more likely to obtain financial services, such as guarantees for member loans. Cooperatively convinced members (cognitive social capital) are more willing to provide capital. [EconLit citations: A13; P13; Q14].

For the rural districts of China to get an economically and socially sustainable development, the strengthening of agricultural cooperatives is essential. This study aims at presenting a model about how social capital within the cooperatives can be converted into financial capital to the benefit of both the cooperative and the members. Case studies of four cooperatives serve as illustrations. There is a large amount of social capital in these cooperatives, with their operations simple enough to allow members to be involved. The supplying members (common members) are few and well acquainted with one another. They have close relationships with those individuals (core members) who have the dominating ownership and who run the cooperatives. These case cooperatives were chosen because they have innovative financial solutions. For example, members let their private assets and those of the cooperative constitute joint collateral when money is borrowed from financial institutions. In another case, the members trust each other sufficiently for there to be a mutual fund that lends money both to members and their cooperative. Yet another model involves members having low demands concerning capital returns when lending to their cooperative.

Although the role of farmer cooperatives as a social unit can have impact on their performance, empirical analysis on how societal output and social value relevant variables affect the cooperatives performance is sparse. The objective of this paper is to provide an economic framework and operational model for performance measurement of farmer cooperative associated with societal impact. A multi-output translog production function considering social output represented by the number of beneficiary farmers using data from surveys 164 cooperatives in Fujian province, China, is estimated. The average technical efficiency of cooperatives is estimated to be 0.747, implying that cooperatives can be increased by 25.30% without any additional resources given the current production input level. It is interesting to find that cooperatives' efficiency scores and their rankings are significantly different with and without taking societal output into account, which indicates that social output created by the number of beneficial farmers' cannot be ignored when evaluating cooperative's performance. The societal value relevant variables for technical inefficiency factors represented by extent of providing members' service, namely training members and selling products are also found negatively affecting technical efficiency of cooperatives. The findings indicate the evaluation of cooperatives performance should consider their non-economic social contribution.

For rural communities in poor countries to develop, farmers need money to invest in their farms. However, with limited assets of their own and poor conditions for obtaining loans, the farmers’ operations suffer. This study explores how farmers’ chances of obtaining a bank loan are related to the social capital that they receive from their cooperative membership. The data originated from 743 farmers in Fujian province, China, and was analyzed with the help of the instrumental variable probit (IV-probit) regression model. The results show that (a) cooperative members have a higher chance of obtaining a bank loan compared to non-members; (b) cooperative membership positively influences the chances of obtaining a bank loan for farmers with no acquaintances in banks and government or off-farm work; and (c) among farmers with higher financial knowledge, cooperative members are more likely to receive a bank loan than non-members are. Therefore, the conclusion provides empirical evidence for the financial function of cooperatives to farmers. The findings are especially relevant for cooperatives in developing countries, and they call for farmers and cooperatives to establish cooperative financial institutions. Moreover, the research conclusions point out the direction for further improving the financial effect of cooperatives.

This study is the first to empirically investigate whether farmers’ assessment of their cooperatives’ environmental efforts is related to their satisfaction with the cooperatives, in addition to their assessment of the cooperatives in economic and social terms. A survey was conducted among a randomly selected sample of 211 members of 63 farmer cooperatives in Fujian Province, China. Binary logit analyses were conducted to test three theoretically derived hypotheses. There was a positive relationship between member satisfaction with the cooperatives and farmers’ assessment of the cooperatives’ environmental actions, although the cooperatives’ economic and social contributions were even more appreciated. Consequently, at least under the prevailing circumstances, member satisfaction with their cooperatives is positively associated with the farmers’ view of the environmental ambitions of their cooperatives.