UC Berkeley

Many China scholars have explored shirking by local officials and effective implementation, but fewer have examined polices that are implemented with great enthusiasm. The Microfinance for Women Programme fits in this last category. Especially in Sichuan, targets for lending were set by the province, exceeded, raised by cities and counties, and then exceeded again. The immediate reason that lending took off in 2012 was the relaxation of collateral requirements that shifted the risk of defaults away from local authorities. But the surge in lending also had deeper roots in the policy's vagueness, institutional incentives, bureaucratic pressure, and local fiscal and organizational interests. Although enthusiastic implementation occurred (and generated much-needed revenues for local governments), the history of the programme also shows that it can be halted, as was the case when instability loomed and the authorities reversed bureaucratic pressure by calling for local cost-sharing and introducing uncertainty over whether interest subsidies would continue.