Governing Forest Rights Mortgage Loans Through Hybrid Governance: Institutional Innovation and Organizational Mediation in China’s Collective Forest Regions

Forest Rights Mortgage Loans (FRMLs) have grown quickly in China’s collective forest areas, even though the basic conditions for this type of lending remain far from ideal. In many places, forest holdings are small and scattered, property rights are complex and not fully consolidated, and channels for disposing of collateral are limited. Under these circumstances, the Fulin Loan Model (FLM) in Fujian provides a useful case for understanding how forest-rights lending can still function in practice. Drawing on fieldwork, semi-structured interviews, and process tracing, this study explores both how the model was established and how it has been sustained over time. The analysis suggests that the FLM is neither a straightforward market-based lending tool nor merely a top-down policy arrangement. Rather, it relies on a more mixed form of governance in which local government support, banking procedures, and village-level social relations are brought together through specific organizational arrangements. These arrangements help lower the costs of early institutional experimentation, distribute and manage lending risks, and translate locally rooted trust into a form of credit support that formal financial institutions can recognize. As a single-case study, the FLM points to one possible way in which rural finance can be made workable under conditions of incomplete markets and strong social embeddedness.