Rural Financial System Innovation Research

Rural finance has always been a hot topic. Academics, practitioners and government departments have invested enormous effort in China's rural financial issues. Rural Finance is the core of modern agricultural economy, so the rural economic development and "three-dimensional rural issues" both depend on rural financial development. In recent years, the quality and level of rural financial services indeed rising, but compared with the urban industrial and commercial financial system, rural financial markets are significantly behind in modern financial service concept, innovative means, such as financial products. Rural financial markets still can not meet the broad needs of farmers. Backwardness of rural financial markets and shrinking market size restrictions on rural economic development are more prominent. The 2010 "central first document" also clearly put forward to improve the quality and level of rural financial services as key to solve "three-dimensional rural issues", and guide more credit funds to Agriculture industry, effectively solve the problem of rural financing difficulties.Literature has shown that retaining the rural financial capital to make it good for the development of rural financial services is the most important problems of rural finance. The current proportion of the population engaged in agricultural production is declining, the structural changes taking place in rural areas. Facing such structural changes in rural areas, rural financial need innovation to adapt to this change, and successful innovation must be able to truly meet the farmers' needs. Existing studies focus on the government and financial sector research, although there are also a small amount of research focus on innovation in the rural financial market from the point of view of farmers'demand, but such studies often recommend corresponding financial products directly according to the farmers'behavioral characteristics, and do not dig the demand and motive behind such behavior, but a good financial service innovation model must be able to truly meet the needs of farmers in-depth, so this paper examines the behavior of peasant households as a breakthrough in research to investigate the coastal area farmers behavioral characteristics, in-depth study farmers real needs behind the behavior characteristics, so as to financial products designed to meet the needs of their potential to achieve real prosperity and the purpose of providing guidance to financial markets.Particular, the paper studies six major problems:(1) Use the sample data of Linhai from year 1996 to 2009 to test the causation and correlation of rural financial development and economic development, and the relationship between rural financial structure and economic growth. Studies suggest that further development of diversified, multi-level, grass-roots rural financial institutions, to expand its market share in the rural areas, should be present not only in Zhejiang, but also in China's rural financial reform and rural finance development. (2) Based on Iqbal (1983,1986)'s theory, we built a theoretical model of the impact of rural households'credit behavior to rural economic in China. On this basis, we select the 2000-2008 national statistics to do the empirical research, test orientation behavior of farmers, credit Level of rural economic growth and the impact on the relationship between consumption of rural residents. We found that the credit facility to agricultural production has a more significant positive effect on rural economic growth, household income level, and the level of household consumption expenditure, while the level of consumer credit Average consumption level of households with a negative correlation. (3) Propose an innovation model based on the theory of endogenous rural financial system, stressed the grasp of the participation of micro agents on rural financial innovation. The major demand of China's rural finance-the farmers, have different financial needs and levels, to truly understand the financial needs of farmers, must first in-depth research needs arising from micro-foundation:the behavioral characteristics of farmers. (4) Study the investment behavior of households and its influencing factors, the study found, farmers herding behavior of agricultural production for farmers to make investment decisions not significantly influence herd behavior and proactive level of investment for the farmers have an important impact. At the same time, restricting household investment motives, investment capacity of some variables, such as:investment income, investment opportunities, household family income, financial constraints and other variable production and farmers herd behavior has a certain relevance, while these variables themselves of production for farmers the level of investment in agriculture have an important effect. (5) Study the credit behavior of rural households and its influencing factors, the study found, in addition to demographic characteristics of households, household income and expenditure and assets, loans, interest rates and duration of the external objective factors, the farmers themselves the "internal" their credit behavior can not be ignored:farmers for loans and loan cognitive bias shown by the course of the same behavioral problems that affect important factors in their credit needs. Loans for farmers to be fully solved problem, we need innovation in rural financial system to enhance farmer awareness of the characteristics and patterns of behavior, consider these deviations to the farmers the impact of the credit act, in order to design to eliminate or reduce this adverse effects of the system or product. (6) Construction of the theoretical framework and based on the investment behavior of households and credit behavior, use of behavioral characteristics of households and the financial needs of the empirical findings and policy implications of behavior from the perspective of farmers in rural financial system innovation, Linhai, Zhejiang various practice to clarify the theoretical basis of innovation and success, fully reveals the "trinity" service model, the establishment of rural credit union funds, "harvest card" micro-credit loans to rural financial services for Zhejiang Model and system innovation with The important practical significance, through the practice of analysis, draw conclusions, summarize the theoretical research results will be more realistic explanation and guidance.The Paper's innovation is mainly reflected in:(1) Construction a theoretical framework of endogenous financial innovation based on farmers'behavior, tapping farmers'demand generated motivation behind this behavior and behavioral characteristics, make good financial services innovative model must be truly meet the needs of farmers in-depth. (2) The empirical study shows the structure of the rural financial impact on the role of rural economic development, verified Lin Yifu (2006) proposed "Optimal Financial Structure". (3) In the investment behavior of households, the paper pioneering attention to the herd behavior that in our household economic activities in the general behavior shown by an economic characteristics of households influence the production agriculture investment situation. (4) In the borrowing behavior of households, the paper put forward the innovation:cognitive bias and behavior bias of farmers influence the credit needs importantly with other factors, but previous studies in analysis of the factors that influence farmers credit main concerns of farmers in the demographic characteristics, family income and expenditure and assets, loans, interest rates and their terms. (5) Combine the theory of rural finance and institutional innovation practice, use the actual household survey and the Government, financial institutions access to the data statistics, this paper empirically study the importance of the development of rural finance and the economic behavior characteristics of farmers'and their influencing factors. We then use the conclusions to analysis the financial system in rural areas of Zhejiang Linhai, for a variety of innovative practices, and provide detailed and reliable theoretical basis to guide the further development of innovation of rural financial system.