The Rural Financial Market In Shaanxi Province: Openness, Efficiency And Influencing Mechanism

As a phenomenon of objective existence in economic and financial fields of China, rural finance is closely linked with the duality of its economic structure. The rural financial market, which is an important part of modern financial market, has been directly or indirectly affecting economic development in rural areas, has the vital significance to solve the development issues of agriculture, rural areas and farmers. Although the great changes have taken place in China’s rural financial field, and the rural financial market system, with Chinese characteristics, is being gradually formed, the imbalance and low efficiency in the rural financial market is still significant. Opening the rural financial market and forming the effective competition are the key method to solve above problems. Therefore, many documents of the central government give the guidance to the openness of the rural financial market. At the same time, the People’s Bank of China, the China Banking Regulatory Commission and the Ministry of Finance of China issue a series of policy to promote the openness of the rural financial market. They hope that the openness could form an efficiency rural financial market to support the development of agriculture, rural areas and farmers. Shaanxi province, which located in the underdeveloped western region in China, geography divergence from north to south induced the multilevel, different and diversified attributes of its rural economy. Moreover, the rural economy in Shaanxi province is now in the transformation stage from the traditional scattered peasant household system to the modern industrialization of agricultural production pattern. Since the PBC launched the commercialization the small loan company pilot in 2005 and the CBRC adjusted and eased the access policies for banking financial institutions in rural areas in 2006, the openness of the rural financial market in Shaanxi province now enter to the operation stage. Therefore, how about the openness and efficiency of Shaanxi rural financial market? What about the influencing mechanism of openness on efficiency? Whether the openness of the rural financial market promotes the efficiency of the rural financial market? These are the major research questions of this study.Therefore, based on the domestic and foreign analysis about the rural financial market openness and the efficiency, take the theory of institutional economics an rural finance theory as a guide, select. qualitative. and quantitative analysis. method.s, our study focus on the rural financial market openness, efficiency and the influencing mechanism of openness on efficiency. First, start with a comprehensive study of the existing researches about this topic to find out the research point for this study; design the theory analysis framework, elaborate the related theory as the theoretical basis of this study. Secondly, review the historical process of the rural financial market openness in Shaanxi, based on the institutional economics to analyze characteristics and evolution trend of the rural financial market openness in Shaanxi, and then established the index system from market structure, market scale, and market depth, have a quantitative evaluation about opening degree of the Shaanxi rural financial market. Thirdly, select indicators to build the evaluation system of the rural financial market efficiency from the perspective of financial support to agriculture and rural financial institution, the Shaanxi rural financial market efficiency were quantified evaluation. Finally, based on the discussion about the market openness, market efficiency, we analyzed the manifestations and causes about the influence mechanism of the rural financial market openness on the efficiency of the rural financial market, and give policy suggestions. Finally, the mainly research conclusions in our study are as follows:(1) The rural financial market openness in Shaanxi has the following characteristics:government-oriented mandatory; progressive advance in pilot promotion and lagging behind of rural economic system changes; because of the existence of path dependence, Shaanxi rural financial market should choose the "dual combination" openness method combined with induced and imposed change. Compared with the beginning of openness, the rural financial market comprehensive openness degree in Shaanxi has an upward trend, the average annual growth rate is 40.75%, the comprehensive openness degree of the 80.00% county samples is improving; the degree of openness for market structure improve significantly, all kinds of openness structure of the County Rural financial market, there is a great degree improved, with an average annual growth rate of 384.44%; the scale of open degree and depth of open degree has a fluctuated trend, there is only 50.00% of the county sample improving the scale of open degree and depth of open degree respectively, the scale of open degree improved only 5.47% in 2012, the depth of open degree fell 31.22% in 2012.(2) Although the efficiency levels of financial support for agriculture in Shaanxi rural financial market showed the characteristics of uneven, but compared with the beginning of openness, 60.00% of efficiency of financial support for agriculture in county rural financial market is improved. The average efficiency level of financial support for agriculture in the area where village banks into is much higher than the average efficiency level in the rural areas where the small rural financial institutions into. For the operating efficiency in rural financial institutions, in 2011, there is only 28.58% in the total sample for small rural financial institutions is in the efficiency frontier, there is also a great difference in the individual efficiency, the variance reached up to 13.94; although there is only 30.00% rural credit cooperatives sample is in the efficiency frontier, but the variance was 0.04, the difference in the individual efficiency is low; for the operating efficiency change, 85.71% small rural financial institutions and 70.00% rural credit cooperatives, the operating efficiency does not decline.(3) For the influencing mechanism of openness on efficiency, Shaanxi rural financial market openness cannot promote the financial efficiency, along with the decrease of opening up of financial support for agriculture efficiency; in 2011, there was not significant influence of the openness of Shaanxi rural financial market on the operating efficiency in small rural financial institutions, on the contrary, the openness had a significant impact on the operating efficiency in rural credit cooperatives. Therefore, the benign influencing mechanism of the rural financial market openness on the efficiency of rural financial market in Shaanxi has not been formed at present, mainly reflect in the efficiency of the rural financial market has not been significantly improved; the rural financial market structure is not balanced; the countryside credit has an insufficient contribution to rural economic growth; the rural financial market deepening degree is low. On the one hand, the internal of small rural financial institutions cannot break the monopoly, the operation risk is difficult to control, the innovation of financial products and services cannot to meet the needs of the market opening; on the other hand, the supervision mode cannot match the rural financial openness, the rural financial market opening support policy was not complete, the laws and regulations for the rural financial market were not perfect and the bad rural financial ecological environment.(4) In order to form the benign mechanism between the rural financial market openness and the efficiency of rural financial market in Shaanxi, we need to expand the coverage of financial services in rural areas; to complete the exit mechanism of the financial institutions;to promote all level of government agency play their own role, complete the rural financial market opening policy; to enhance the competitiveness of small financial institutions; to improve the management level of rural financial institutions; to reduce the service cost of rural finance, to speed up the innovation of rural finance business; to improve the supervision mode of rural finance and legalize the informal finance; to establish the rural financial risk mitigation mechanisms; to improve the rural financial laws and regulations; to optimize the rural financial ecological environment.