Research On Issues Of Rural Credit Cooperatives Reform

On the issue of Chinese Rural Credit Cooperatives(CRCC) reform, there are significant debates and controversies either on the central and local level or from the perspective of academic researchers and practitioners. The existence of this issue has a severe impact on the development of Rural Credit Cooperatives(RCC), thereby affects the development of rural economy. Therefore, it is a necessity to solve this problem in a comprehensive, systematic, radical and correct way.This thesis systematically studies the property rights of RCC with two focuses, one is the property rights system of RCC and another is the management system of RCC. To properly study the reform of RCC, it is necessary to study the current situation and development direction of China’s rural economy and financial system. They are the foundation and prerequisite for the study of the reform of RCC and determine the success of the reform. Therefore, two basic and premised issues are studied in this thesis. One is the current situation and development direction of China’s rural economy, and the other is the current situation and development direction of China’s rural financial system. And during the study process, some related issues are also analyzed: 1. peasant household development theory; 2. rural financial inhibition theory; 3. universal theory of property rights.The study of the current situation and development direction of China’s rural economy and financial system has important practical and theoretical significance. The practical significance includes: 1. Provide a roadmap for the development of rural areas in China,to correct some of the mistakes of the current thinking on rural development. 2. Correct the error thinking on the blind layout of rural financial institutions and solve the contradictions between the profit requirements of the rural financial institutions and the low income of the rural economy. 3. Solve the current debate on the reform of RCC to indicate the direction of reform of RCC, thereby leading to a more rapid and healthy development of RCC. The theoretical significance lies in: 1. Study China’s rural finance from the perspective of rural development to completely change the previous static study of rural finance practice in the theoretical cycle and establish a dynamic study theory and model. 2. Fundamentally solve the dispute on rural finance research, because the static study of rural finance cannot make researchers find a fundamental solution to the problem, but only take into account just one aspect, thereby results in controversy. The rural finance in this thesis is studied in terms of development, so as to fundamentally settle the dispute on rural finance researches. 3. Establish a complete theory of RCC, mainly including property rights theory of RCC, the management system theory of RCC, reform result evaluation theory of RCC and the rural financial system theory. 4. Break through a number of “acknowledged” theories, and extends the study to some fundamentals theories of economics, including peasant household development theory, rural financial inhibition theory,and universal theory of property rights.This thesis consists of eight chapters. The first chapter: Introduction. In this chapter, the research questions, background, practical and theoretical significance, methods and innovations are pointed out and analyzed. The second chapter: History of the Development of RCC. In this chapter, the development direction of RCC is analyzed from the perspective of historical development, namely the longitudinal perspective. The third chapter: Rural Economy and Financial System of RCC. In this chapter, the rural economy and financial system of RCC are analyzed from a macro point of view, namely a horizontal perspective. That is to say that the entire situation- the rural economy and financial system will be used for the point analysis of the development direction of RCC. The fourth chapter: Property Right, Management System and Corporate Governance Reform of RCC. The fifth chapter: Deposits and Loans Reform of RCC. The sixth chapter: Non-performing Loans Reform RCC. The seventh chapter: Evaluation on Reform Effectiveness of RCC. The eighth chapter: Research Conclusions of Reform of RCC. In this chapter the research findings of the whole thesis are summarized.Innovations of this thesis are as follows:1. Innovation of the research methods.This thesis breaks through the traditional research methods of rural finance and conducts the research on rural economy and finance from the perspective of development, taking rural economic development as the basis. At the same time, RCC is studied on the basis of the development trend of rural economy and finance. Thus, the dilemma encountered by traditional methods in the study of RCC can be solved. In terms of the research methodology, it is the question of choice of research methods, the choice of the mechanical and static metaphysical method, or the flexible and variable dialectical method. In this thesis, the latter is chosen.2. Theoretical innovation in rural financial system.In this thesis, it is believed that a rural financial system should be established that takes RCC and postal savings bank as the main body, and People’s Insurance Company of China and China Life Insurance Company Ltd. as the main body of the insurance industry, and covers the rural areas and counties. This financial system should make Agricultural Bank of China serve counties and above and takes other banks and insurance companies as a supplement.3. Theoretical innovation in the property right system of RCC.In this thesis, it is believed that RCC should take the peasant-shareholding public-owned stock system as its system of ownership. This system can be achieved through the moderate control the contribution of strong shareholders, the gradual absorption of some non-peasant dispersed capital stocks, and the listed share issuance.4. Theoretical innovation in the management system of RCC.The actual situation of RCC varies from one place to another, with strong individuality and complexity, so there is no need to keep the single county corporate model if there is no insistence on the establishment of a provincial unified corporate. The regulatory authorities should allow RCCs to select a variety of models and conduct a variety of explorations in accordance with their respective local conditions. The model of provincial unified corporate is the best choice, because it will promote RCC to become the rural joint-stock commercial bank, which is market-oriented, region-based, scale-oriented, self-operated and self-developed at its own risk.5. Breakthrough of peasant household theory.The peasant household theory insists to promote the development of peasant household-typed economy. In this thesis, it is believed that this argument is wrong, because it is inconsistent with the direction of urbanization and goes against the establishment of mode of family farms, collective farms and “base + farm” in the process of urbanization. The rural urbanization cannot be achieved with peasant household economy as the main development direction.6. Breakthrough of the rural financial inhibition theory.The rural financial inhibition theory holds that the supply of rural finance is not sufficient and the financial demands are suppressed. While in this thesis, it is believed that the rural financial inhibition theory is wrong. Since the development direction of the rural economy is urbanization, the rural finance supply should not be sufficient and should be subject to a certain degree of inhibition. The reason is that if the supply of rural finance is adequate, the development process of urbanization in rural areas will be constrained by the power from an opposite direction.7. Breakthrough of the universal theory of property rights.The universal theory of property rights holds that property rights are essential, unique and indispensable in economic activities. Property right is the drive for all economic activities and it can generate incentives and constraints. Property right is universal and its role cannot be replaced by other factors. In this thesis, it is believed that the incentive and restraint can be energized without the ownership of assets, and they can be totally energized by virtue of political power, organizational power and management power. The core of incentives and restraints in management is to have an initial management source. This source engenders the motive power of management, so the incentives and restraints in management can be passed down step by step. As for the matter that whether the source is a property owner or an organization is neither of much significance nor affecting the effectiveness of management. In the course of the new China’s economy development, we ever fully denied the role of property right before the reform and opening up, and then blindly believed in and obsessed with it after the reform and opening up. Those are both extreme metaphysical approaches, proving that universal property right theory is wrong.8. The establishment of a comprehensive evaluation policy basis, evaluation index system and a calculation model for RCC.The evaluation index system in this thesis not only includes the asset size, debt size, equity, income, expenses, profits and other traditional financial index, but also creates the new indexes of growth rate of farmer loan, the supply level of rural financial and the competition level of rural financial, etc. to provide a complete set of index system. The evaluation model sufficiently proved the quantitative relationship between rural credit cooperatives and rural economy.