Study Of Chinese Rural Cooperative Financial Development

The cooperative financial organization (CFO) was established by the working people in accordance with the cooperative principles to improve their working conditions in market-oriented economy. It was managed in a democratic way, provides financial services mainly to its members. Its form includes credit cooperatives, cooperative bank and circulating funds institution in a cooperatively managed enterprise. The characteristics of credit cooperative organizing principles has been changed, adding profit demand, decreasing democratic management and confining in withdraw-ing share along with decreasing favored policies given by some countries; reducing money demands of agriculture production, increasingly intense competition coming from commercial bank and increasing scale of cooperative bank. Now in the world there are German co-operative finance model (CFM), France CFM, America CFM and Japanese CFM. They all have obtained successful experience.The Credit Cooperatives (RCCs) of China have given enormous contribution to Chinese economy. The defects in organization, finance policy and Chinese traditional culture caused RCCs changes its feature. Asymmetric information or incomplete information also does it. First, the ratio of member original share to RCCs asset was very smaller and some Rccs has not any original share, so RCCs has become an incompletely member-owned finance organization. Second, RCCs has evolved an organization owned by its inside manager and Rural Credit Cooperatives Union because1 its member could not manage in democratic way. Third, RCCs did not provide financial services mainly to its shareholders and farmers. By reforming RCCs management system RCCs began to conform to cooperative principles. But there are some questions in setting up a complete share structure, building a clear corporation-manage system, establishing an effective industry govern system and policy supporting system.The cooperative non-governmental credit or people-to-people credit (PPC) and the Rural Cooperative Fund (RCF) are out-institutional CFO. They developed quickly just because the institutional financial organizations could not meet the finance service demands of rural people. The credit ratio of PPC is decided by market. Because the credit ratio is often high the government usually restrict it. RCF also is a cooperative credit organization which provide financial service to its community inside people. Because there were not any limits in RCF running a lot of RCF had many problems and influenced the rural financial order, the government decided close it. If we want to eliminate completely the RCF phenomenon we must accelerate to reform the rural finance system, especially reform the RCCs management system.Developing the rural economy needs support by the financial organization which is set up in rural area, especially need support by the CFO. In rural area farmers are the main money provider and demander of financial service. RCCs is the main channel in collecting farmer funds but farmers could not easy borrow money fromthem. The middle and small enterprises in rural area (MSEs) have enormous funds demands but they are also difficult in loan from the institutional financial organizations. There are finance inhibiting in rural area so that farmers and MSEs have to borrow money from non-government financial organizations or financial market. So deepening the rural credit cooperative system reform is the inevitable select because RCCs is the main institutional financial organizations in rural area.The new institutional economics considers cooperatives is a good institution but also has some errors. Credit cooperatives has some outstanding characteristics comparing to corporation. The characteristics of Rccs of China are not outstanding but some seasons such as the government special fondness have influenced the rural credit co-operative reform. The paper thinks that credit cooperative's original share is its basis share but it can not stabilize credit cooperative' s funds just because its member can draw his s...