The System Dynamic Model For Our Country's Rural Financial Development And Empirical Analysis

As a large agricultural country, the "three rural" issue remains a major problem to be solved at the present even in the future for a long period of time. However the rural economy and rural social undertakings cannot be separated from the promotion and support of the rural finance. Enhancing the level of financial development in rural areas and enabling finance to play its central role have become an important issue. Based on the causal features of rural finance, multi-feedback characteristics, nonlinearity, and system features such as inertial system characteristics, this article researches on rural financial system viewing from the perspective of system science and it explore the mechanism of the interaction among rural finance, rural economy and the rural society.Firstly, specific to the object of the study in this article and according to the setting principles of system model and the main factors affecting rural finance, rural financial system is divided into three subsystems such as the subsystems of rural financial development, rural economy and rural social undertakings. Based on the measurement of various factors of rural financial system and system dynamic relationships, this article builds a rural financial system dynamics model. The model fitting test results show that the system dynamics model, with all errors are within the allowable range, owns a high accuracy that ensures it meets the requirements for an empirical analysis.Secondly, relevant data is collected to empirical analysis and policy simulation about the rural financial system dynamic model. Empirical analysis results of the three subsystems show that:1. the level of financial development in rural areas before2010was on the rise while it tended to decline after2010. The cause of this going down is the growth rate of rural finance is slower comparing to that of rural GDP. Namely, the rural financial development and rural economic growth haven't been complimentary for each other.2. The agricultural GDP and agricultural GDP growth rate trend to go upward, while the weakness of rural enterprises'added value has affected the further economic development of rural economy.3. The level of China's rural social development is in a good upward trend, which complies with the trend of the rural economic growth and rural financial development. It proves that the continuous development of China's rural economy and rural finance plays a significant role in the promoting of rural social undertakings. Through overall analysis on the rural financial system, it can be found that each subsystem is mainly restricted by the rural financial level in rural development. The main manifestation is that rural financial development level did not correspond to the growth of the rural economy. While a decrease in the level of rural financial development in turn to further restrict the development of rural economy and social development.Thirdly, the game balance of the various stakeholders to provide a logical basis for the development of China's rural finance is analyzed. Game balance shows that under the complete assumptions, farmers will choose not to repay searching for a higher income, so the game can not achieve a win-win balance; Under restricted conditions, legal constraints will increase the litigation costs of rural financial institutions, and the use of security constraints will increase the borrowing costs of farmers, so the win-win game equilibrium can not be achieved either; Under the credit constraints, on one hand, the government can build a credit system to ensure that farmers repay their loans without increasing the burden on rural financial institutions. On the other hand, it can also reduce the farmers borrowing costs, as long as the benefits that farmers get from the expanded production harvest loans from banks can exceed the loan interest to pay, the three-person strategy equilibrium can be achieved; When information is incomplete, in the game made up of the government, rural financial institutions and farmers, there are two perfect Bayesian equilibriums. If the possibility for farmers repay the loan on time exceeds0.5, the three-person strategy equilibrium can be achieved even with no credit system constraints. When the government chooses to build a credit system, the chances of gaining a win-win game equilibrium depend on the enforcement of punishment from the credit system. That is, the probability of being punished and the extent of punishment for farmers'breach of contracts. The mutual-gain equilibrium can be reached only when penalties for breach of contracts exceed the benefits that farmers can get from refusing refused to repay the loan proceeds.Finally, according to the result of the empirical analysis and game theory, this article puts forward five policy proposals to enhance China's rural financial level.1. Deepening the role of the rural financial development subsystems;2.Futher balancing the interests of stakeholders in rural financial system;3. Guiding and regulating the informal financial institutions and developing the rural financial system from multiple aspects;4. Encouraging innovation of rural financial products and ensuring the needed finance system of rural economic development.5. Improving the rural financial law system and building a powerful credit system.