Research On The Institutional Innovation Of China Rural Financial Development

Reform and opening up of China began in the rural areas, the Communist Partyof China started the most magnificent economic reform in the history of mankind.Through the rural household responsibility policy,Till 2010, Chinese economy hasbeen ranked second in the world, import and export scale has been ranked first.However, the rural financial reform is far behind the innovation in urban andindustrial and commercial fields, which was the pioneer of the economic restructuringpreviously .Furthermore, because the rural financial system reform has lagged farbehind the urban reform of the financial system, not only the economic and socialdevelopment of rural areas has been constrained, the gap between urban and ruralareas has been expanded. At present, the key to chinese financial structural reform isthe rural financial structural reform, the success or failure of the rural financialstructural reform is in relation to the success or failure of economic reform in China.The development path of the rural financial structural reform in china defect as thetop-level design, leading to the backward state of rural economic development. That isto say, the emphasis of the financial system reform is the system design andimprovement of the path.Based on the related literature, from the perspective of institutional economics,In the application of rural financial development and institutional innovation theory,this dissertation make efforts to study the evolution and restrictive factors of the ruralfinancial institutional innovation in China. And learn from the international ruralfinancial system construction experience, this paper try to explore the conducivepath of institutional innovation to the development of rural financial in China, anddesign top-level patterns of the rural financial system reform.The main significance of this dissertation is: Firstly, contribute to enrich thetheory of socialist market economic theory, and provide the corresponding theoreticalsupport for the development of rural finance .According to the theory of institutionalinnovation, summarized the essence of the innovation of rural financial system athome and abroad ,on the basis of two aspects of institutional innovation and systemdesign, combined with the rural economic and financial developments in the newenvironment, improve the top structure design of the rural financial innovation infuture ,as well as enrich and expand the theoretical system of rural financial system reform in China. Secondly, help promote the coordinated development of a widerange of new rural financial institutions from a practical level. In this thesis, the mainproblems and limitations of chinese financial system was discussed, the restrictingfactors of rural financial development was studied in-depth.,propose operationalgovernment supporting policies and institution building measures from a practicalperspective . Thirdly, helpful to improve financial legislation based on the social andeconomic development reality in rural areas. Among many elements that restrict ruralfinancial development, legal construction lag and inadequate protection of creditor'srights of rural financial institutions, the inequality between urban and rural financialservices policy of local governments, is more critical factors which is affecting ruralfinancial development. Fourthly, departure from the further optimization of thefinancial institutions operating environment, propose specific measures to strengthenrural financial system reform, which shows some operational meaning.In addition to Introduction, this dissertation is divided into five chapters, thebasic contents of each chapter are as follows: the first chapter"The Theoretical Basisof Institutional Development of China Rural Finance", mainly studied the financialrepression, financial deepening and financial constraint that is closely related tofinancial development, and seeked theoretical basis for future research. Especiallymaked research on the relationship between the law and the rural financial systeminnovation, which is helpful to provide a theoretical basis for further study. in additionto general laws of the financial operation, because of the special production regionand industry , rural finance, in particular that closely related to agricultural production,there are still some special properties. This chapter mainly explored specialagricultural finance theory from the perspective of inclusive financial theory,subsidized credit and information asymmetry. From the perspective of Law andEconomics, researched on the constraints of the various systems of the variouseconomic entities, including statutory, customary rules. In order to reflect theprofessionalism of the research in this chapter, also described the relationship betweenthe development of rural finance and law and finance research.The second chapter"Historical Track of China Rural Financial Development andInstitutional Innovation", mainly studied how Chinese rural financial system wasformatted and developed, and product innovation as well as service reform in Chinarural financial innovation. It focuses on the formation and development path of multi-level rural financial institutions. In accordance with the historical context ,thischapter introduces the formation and development of chinese rural financial servicesystem before and after reform ,the achievement of the stock reform that representedby rural credit cooperatives and the increment reform that represented by villagebanks, and what should pay much attention to, also tried to find out the historicaltrajectory and causes of the rural financial system reform.Chapter III"Institutional Restriction on China Rural Financial Development",mainly studies the institutional factors restricting the development of China ruralfinancial system from a macro and micro perspectives. It focused on the changes ofgovernment-led rural financial system reform, the system defects of rural financialdevelopment, as well as the main problems in the rural financial development. Thechapter argues that the significant difference between rural financial development pathabroad, the government has always played a leading role in chinese rural financialdevelopment process. The government runs a special and important position in thefinancial industry, who is both supplier of system elements and important participantof financial markets. Government policy has a comprehensive impact on the healthydevelopment of rural areas as well as the entire financial system. If the governmentpolicy is scientific, it can promote the healthy and rapid development of rural finance,otherwise it will inhibit the development of rural finance. Therefore, the articleanalysis institutional restriction on rural financial development from the governmentand the micro angles, including lack of system in the process of government-led ruralfinancial reform and the existing development process of rural finance.Chapterâ…£"The Comparison of International Development of Rural Finance",focuses on the experience and lessons from rural financial development andinstitutional innovation of developed countries and developing countries, in order toprovide a reference for rural financial system reform in china. On the whole, foreignrural finance can be divided into two parts: commercial finance and policy-orientedfinance, and in different countries commercial finance and policy-oriented financeplay different roles in the overall rural financial system. Foreign practice of ruralfinancial development, has a positive reference to improve the rural financialdevelopment of our country.Chapterâ…¤"Construct New Framework of China Rural Financial System",proposes that the rural financial system should be based on rural economic and physical characteristics, establishing a competitive rural financial market system,accelerating the development of the sustainable rural financial institutionssystem ,establishing a rural financial service system, and improving the rural financialregulatory system.The innovation of this dissertation:Firstly, highlights the relationship between law and rural finance. the biggestconstraint of rural financial development or institutional innovation is not theeconomic conditions of farmers, but the contradiction between the existing ruralfinancial system and the characteristics of farmers operation. This article is trying toseek the intersection of healthy development of the rural financial institutions and thefarmers or micro-enterprise under the existing legal framework. Although the onset ofchiese economic reform lies in the rural areas, but in recent decades, manybreakthroughs in economic reform is concentrated in urban or industrial andcommercial fields. In rural areas, although the demographic characteristics andeconomic and social development model has a significant change, but rural areas ofeconomic entities lack the necessary financial activities ownership relation in thecontext of city industrial and commercial economy seriously because of ruralcollective property right. Although in recent years in some areas , the orderlytransfer of agricultural land, reform of the rural construction land use was carried out,but still can not protect the security of agriculture-related financial institutionscompletely. This is the most fundamental problem of restricting financial institutionson expanding rural financial services. This paper highlight the important role whichthe legal protection of creditor's legitimate rights plays, suggest through improving therural property rights legislation, provides more legal collateral for the economicentities in rural areas, encourage rural finance institutions to open up the rural market,creat advanced financial service for the rural economy ,the requirements ,and achievethe harmonious sociology development .Secondly, according to new trends in the economic and social development inrural areas, put forward the broader financial system concept including the entitiesfinancial services and the extension of financial services. Along with significantchanges of the demographic characteristics, as well as the implementation of variousgovernment benefits in rural areas, economic and social activities have a big change.Particularly, a large number of surplus rural labor go out to work, in addition to the significant improvement of the rural finance hardware infrastructure conditions,farmers have high requirements for traditional financial services such as savings andloan exchange, At the same time, along with technology advance, the popularizationof telephone banking, bank cards and other new types of financial services in ruralareas , the connotation and extension of rural financial services changes a lot. Inaddition to the traditional financial services, the demand for financial servicesextension is growing. Rural financial institutions must face new external economicand social environment, accelerate system and mechanism innovation. This paper isactually based on the above judgment, put out corresponding countermeasures andsuggestions for rural financial institutions to develop the extension of financialservices energetically, which should have some guiding significance.Thirdly, advised different financial regulation of rural financial institutions. Thecurrent financial regulatory system is actually based on the characteristics of the urbanindustrial and commercial environment or large financial institutions, ignoring ruralfinancial institutions operating characteristics and the unique natural features in ruralareas. For the financial system safety considerations, financial regulatory authoritieslimit private capital to participate in the innovation and development of rural financialinstitutions. The existing rural financial institutions regulatory spends high costs, thereare so many constraints on financial products , the objective reality of the rural areashadn't fully taken into account .To support healthy and sustainable development ofrural financial institutions, the actual situation of the rural areas must be considered totake different regulatory means ,reduce the regulatory costs of rural financialinstitutions , support speeding up the financial products or services innovation of ruralfinancial institutions, and supplement by the insurance system, to encourage thedevelopment of rural financial institutions. Only in this way, we are able to makecomprehensive use of incentive and restraint mechanisms to accelerate thedevelopment of the institutional innovation of rural finance and rural financialinstitutions.Fourthly, adhere to commercial operation of the rural finance, by the same time,taking into account the general benefit of rural finance , to speed up the process ofinclusive development in rural areas. In the process of China rural financialdevelopment and institutional innovation, deal with the relationship of policy financeand commercial finance is one of the most important issues of financial services system. For a long time, Because rarely consideration of the input-outputcharacteristics of policy financial, financial policy implementation effect is far fromideal, and there is a big controversy. Foreign rural financial Practice has proved thatpolicy-oriented financial and commercial finance is not the fire and water relations,but a special competition and cooperation. China's rural financial system innovation,should be based on the positive role of policy-oriented finance, make up for marketfailures in the commercial financial operation through policy finance. Similarly, thecommercial finance activities are needed to corrective government failures of ruralfinance. Rural financial system must make full use of both the government and marketforces, adhere to the coordination between policy-oriented finance and commercialfinance, in order to best meet the special needs of financial services in rural areas,accelerate economic and social development in rural areas, at the same time, supportfor the industrialization of agriculture and development of modern agriculture, andminimize the differences between urban and rural areas.