| Since the introduction of reform and opening-up, China has undergone enormous changes, and people's living standard and quality have been significantly improved. However, the rural area where the reform and opening-up originated, has not shared the fruits of reform and construction. Rural residents'income is growing slowly, and the gap between urban and rural residents' income is widening. In recent decades, three rural issues have gained constant attention from society and Chinese government. Chinese government formulated CCP Central Document NO.1 for several consecutive years devoting to the solution of three rural issues, and scholars also did many researches, demonstrating the complication and difficulty of this issue. From the perspective of finance, rural households are demanders of rural financial service; hence establishing an effective lending supporting system is crucial for rural households'income growth, agriculture development and rural area's prosperity. Unlike economic subject in traditional theory, rural households as basic units of economy and society, have their own features in social structure and behavior form. Based upon historic statistic of China and Hunan province rural economy, and questionnaire analysis of two thousand rural households, this paper tries to establish an empirical model of rural households'borrowing demand and credit provision in rural financial market, evaluating the influence of rural credit policy on farming development, and to find appropriate credit policy to support rural households' investment, consumption, income growth and living improvement, which has a practical significance for resolving the three dimensional rural issues, and maintaining steady and rapid economic development.This paper follows the Logic Sequencing from theory to evidence. It firstly makes a retrospect of previous theory of farmers'behavior, financial development in countryside and institutional change, and of research results on farmers'behavior and financial problems. Then it analyzes the status of rural financial service demand and provision, and gaming relationship of rural households and features of lending markets for rural households. The later is the main theoretical framework in this paper. Based on the above research, the paper analyzes the rural households'structure, revolution path, and the relationship between rural households'structure and farmers'behavior, behavior feature and concrete form. It makes further research on rural households'credit behavior, exploring empirical evidence both of overall relationship between rural households'structure, behavior and lending activity, and of respective relationship between rural households' lending and their investment, consumption and income increasing. It also evaluates the effect of rural credit policy on rural economic development, which in substance is the result of rural households and rural financial institutions'gaming. And it finally contemplates the problem of existing rural financial system, and put forward opinions of establishing a rural financial service system adapting to rural households'structure and behavior.The innovation of this paper goes as the following three aspects:(1) the proposal, for the first time ever, of concept of dominant and recessive effective credit demand. We need to confirm whether the demand is effective or not, then if the effective demand is advocated by rural households, it's dominant no matter it is satisfied or not, which helps to find out the reason of low demand fill rate; (2) for the first time it uses an discrete choice model to make comparative study on the effect of formal lending and informal lending on rural households'structure and behavior, which helps to find out the key points and improvement of rural financial system and improve it's efficiency; (3) for the first time it use DEA model to evaluate the effect of rural credit policy based on rural households' behavior. Not only to evaluate the effect of rural households'credit, but also to evaluate the financial institutions'operation after executing credit policy. The evaluation results can reflect the allocation efficiency of rural households'credit resource and policy effect. This paper comprehensively applies theoretical study, empirical study, literature search approaches and investigation and research method.The main conclusions of this paper are:(1) In the transitional period, rural households' structure and behavior form take profound changes. The trend of rural households' production and operation to non-agricultural becomes more obvious, and the proportion of non-agricultural income in the rural households'income structure grows quickly, and the income gap is wide with a ratio of the number of rural households with low, medium and high income level is 2.5:5:2.5. Less than ten thousand is low level, and more than thirty thousand is high level. The production expenditures of rural households are stable and the consumption expenditures are gradually upgraded. All of these changes promote the diversification of rural households'structure.(2) Rural households have production, consumption, and social characteristics, therefore, farmers'behavior is super-stable, imitative, risk aversive and external guided. Farmers'behavior and their features show that hypothesis of rational man in the classic theory cannot be fully applied in farmers. Farmers'behavior, expressing bilateral features, under many restricted circumstances, is bounded rationality. Farmers'behavior is sufficiently affected by rural households'structure. Rural households are the important entities of the investment in rural area and agricultural investment. But rural households usually invest in simply re-production, non-agricultural investment and short-term investment, which can be affected by income levels and the stability of income. In general, rural households do not have adequate consumption. Many rural households borrow money for consumption which means their consumptions concept has changed.(3) On one hand, the efficiency of rural households'credit demand is affected by the low profits of agriculture, slow accumulation of capital, inadequate rights and rural households'properties. On the other hand, farmers have a strong sense to repay the loans and strengthen their credit record. Therefore, we need to look at the rural credit demand comprehensively and fairly. Inadequate dominant credit demand is demonstrated by less investment opportunities, conservative investment will, restricted credit provision. Rural households' credit goes to two aspects:production and consumption. Hence, production-oriented or consumption-oriented is crucial to judge the effectiveness of rural credit policy.(4) There are two types of rural households' credit:formal financing and informal financing. In the past, rural credit cooperatives took the major share of the formal financing market, but things changed recently by intensified reform on rural financial system. By increasing rural credit products and innovating service patterns, we can effectively increase the supply of rural households' credit. Innovation on financial system and products has become the major measures to promote the supply of credit to rural households. The informal financing remains the important way of credit to rural households.(5) In the imperfect information market, due to the information asymmetry, trading cost and uncertainty, gaming between rural households and formal financing intermediaries and informal financing intermediaries determines the different policies drawn by formal financing intermediaries and informal financing intermediaries and rural households' choice. Policies of formal financing intermediaries come from the disequilibrium of gaming between rural households and formal financing institutions. Informal financing institutions can gain more information about rural households; therefore they can exist for a long time in the rural households'credit market. In the process of gaming, the path dependence of financing channel can also influence rural households'investment and consumption.(6) There are three features of rural households'credit market, which are determined by the gaming between financial intermediaries (formal and informal):the co-existence of formal financing and informal financing, a market structure with both segmentation and monopolization, and market equilibrium between limited supply of credit and restricted credit demand.(7) Different structure of rural households and different farmer's behavior can impose different influence on the demand and supply of formal and informal lending. According to the education structure of farmers, formal financing institutions tend to issue credit to farmers with higher degree of education, while farmers with lower degree education tend to borrow from informal financing institutions. According to the family structure of rural households, farmers with good social relation can get formal and informal credit more easily. According to the income structure of rural households, low income rural households tend to borrow from the informal financing, and the informal financing also tends to issue credit to low income rural households. Formal financing and informal financing institutions hold totally different attitudes to rural households'land assets. Informal financing intermediaries tend to support rural households with more land assets. Formal financing tends to issue credit for production, while informal financing tends to support living and consumption.(8) Rural households'credit has significant influence over the growth of rural households' income, but not vice versa. For low income farmers, rural households'credit's influence is not obvious, no matter formal financing or informal financing. While for high income rural households, the influence is more obvious. Rural households'credit's effect is not obvious over agricultural production, while more obvious over non-agricultural production. Rural households'income do not has obvious influence over supply and demand of formal financing, while has negative effect over demand for informal financing. This demonstrates that rural households will apply for credit from formal financing institutions because of the increase of income, and therefore further improve their income. In other words, rural households do not expect to borrow from formal financial institutions to improve income, and the increase of rural households'income does not lead to greater supply of credit from formal financing institutions.(9) Rural households'investment and consumption behavior have a close connection with rural households'credit. Self-funded capital takes the major part of the rural households'investment fund, and rural households'informal financing is greater than formal financing. Formal financing tends to support rural households'long-term investment while informal financing tends to support short-term investment. Generally speaking, formal financing and rural households'credit can greatly promote rural households' consumption. Informal financing has greater support over rural households'consumption than formal financing. Formal and informal financing both tend to support rural households' non-basic living consumption.(10) At present, the implementation of rural credit policy in the rural financial institutions is not satisfactory, and has not met the requirement of supporting rural households set in the rural credit policy. In different areas, the implementation effects differ greatly. The implementation of policy does not necessarily match the ultimate effect over rural households and financial institutions, with no obvious positive-going relations. The increase of rural households'credit input does not mean that farmers themselves improve their life effectively. The allocation of capital in general is insufficient and differs region by region.(11) The problem of rural financial system in China is not inadequate supply, but mismatch of supply and demand, which is displayed in many aspects such as financial entities, business products, credit conditions, approval mechanism, product pricing and infrastructures. Because of the supply-oriented rural financial reform and innovation, we ignore new development of rural economy and new changes of rural households and farmers' behavior, as well as new demand from rural households. Under such circumstances, the reform of traditional institution with the introduction of new agencies and market-oriented, floating interest rate policy, implant of urban financial products are based on the judgment of the market degree of rural households'structure and farmers' behavior, which is obviously too simple. Therefore, the implementation of policy cannot reach the pre-set goal. Accordingly, informal financing, as an important way of credit supply, is restricted and discriminated, without rational guidance and regulation. Similarly, the importance of finance overtakes the importance of providing good system environment and public service, which is essential for rural households'credit.According to above conclusion, this paper puts forward two "rebuilds":one is the rebuilt of rural financial system in China, which means we need to stick to policy finance with common finance as its priority. Meanwhile, informal financing needs to be developed to create good interaction between formal finance and informal finance. The other is the rebuilt of public goods and service system related to rural households' credit, including improving system environment, establishing rural credit reporting system, strengthening the evaluation of rural credit policy, and constantly upgrading the hardware and software facilities of infrastructures.
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