Rural Finance And County Economy Development

Social stability and harmony development in county area are crucial to sustainable economic growth. Research on rural financial problems reveals the relations of various region-specific factors such as financial system, political system and the financial demands of county economy, according to which an appropriate rural financial system can be developed.After recalling the relative domestic and overseas study achievements, the paper analyzes the relation between rural finance and county economy development, both by normative analytical method and empirical analytical method. The paper also advises that informal finance should be included in the current rural financial system to improve financial institutions' efficiency, therefore an appropriate financial resources allocation system can be achieved.Based upon the development objectives and the economic trends of Hubei Province, the paper focuses on the existing problems of rural finance in Hubei and the cause of these problems. In order to facilitate the county economy, the paper also gives policy suggestions on how to perfect the rural financial system:Firstly, most investment in county infrastructures is performed by local government, the fund input is huge but the return is low. Therefore, policy financial institutions should be introduced to provide sufficient fund to the local government.Secondly, since there are many small and medium size enterprises in country area, the local government should make efforts to attract commercial financial institutions, so that financial services and supply in county area can be improved. Possible means include fund outflow restriction and interest subsidy to SMEs.Thirdly, as the peasants' financial demand has the nature of small amount, large quantity and limited guarantee method, development of cooperative financial institutions in county area should be encouraged to provide sufficient basic financial services to peasants.And last, informal finance should be allowed to supply funds in the area where formal financial institutions do not cover, which can largely release the credit rationing in county areas. The paper comprises six chapters. Chapter I introduces the theoretical and practical background on the research of rural finance and county economy, states the theoretical and practical significance of the paper, and discusses the ideas, methods, innovations and difficulties of the paper.Chapter II is the synthesis and analysis on the basic theory of financial development and economic growth. The paper organizes the theory of economic growth in Section I, including the study on county economy development. In Section II, the paper reviews the literature on rural finance and introduces the relative research on development theory. In Section III, the paper provides the theoretical description on the relation between rural finance and county economy.The main purpose of Chapter III is to analyze the financial and economic situation of counties in Hubei Province. The paper gives specific analysis of different financial needs for different subjects in rural area--farmers, rural enterprises, and the government. Meanwhile, the functions and existing deficiencies of different financial institutions in county area are also discussed.Chapterâ…£gives the measurement and analysis to the rural finance and county economy development of Hubei. Based on the SCP perspective, the situation and possible choice of rural financial market structure are analyzed. Through the Panel data, an empirical study on rural finance for county economy development is then provided.Chapter V gives the comparison of the international rural financial systems. Section I introduces the rural financial systems of typical developed countries. Section II introduces the rural financial systems of some developing countries. Valuable experience gained from international rural financial systems is clarified in Section III.The last chapter strategically gives the solution on how to accelerate the county economy development through rural financial means. In order to satisfy the financial need of county areas, the paper put forward a series of policy and advices to unchain the financial system, accelerate the evolution of county economy.