Study On The Management System Reform Of China's Rural Credit Cooperatives

Since2003, in line with the principles of rationalization, standardization andcommercialization, rural credit cooperatives have been managed by the local government inorder to optimize the initial state of its operation and improve the interior and exteriororganization environments. This reform policy has been fulfilled and some primaryachievements have been accomplished. Yet many problems are displayed such as lackingspecific objective for management system reform of China's rural credit cooperatives,complicated equity organization structure, formalization of corporate governance structure,disorderliness in management system, and simplicity in reform mode, so it is urgent toimprove the management system reform of China's rural credit cooperatives.Through analyzing the typical experience in management system of credit cooperativeorganizations in foreign countries, and the management system reform history of China's ruralcredit cooperative, the double goals of such reform are extracted vertically and horizontally,and then the methods of actualizing the double reform goals are discussed: includingeconomic analysis of the shareholding system reform and empirical analysis of corporategovernance of rural credit cooperatives from a micro-perspective; structural analysis ofmanagement system from a medium perspective; and analysis of pluralistic reform patternand regional differences from a macro perspective. Finally, some policy recommendations aremade to deepen the reform of the management system of rural credit cooperatives.This paper consists of the following chapters:Chapter1: Introduction. This chapter introduces the research background andsignificance, brings forward the research thread and main research methods, reviews thedomestic and foreign research literature and suggests the possible innovations of this paper.Chapter2: International experience in management system of credit cooperativeorganizations. Through analysis of the management system of credit cooperativeorganizations in Germany, the United States, France, Japan and other countries, it isconcluded that the central government and local governments should clearly understand theirroles in managing and serving the rural credit cooperatives. At the same time, it is proposed toestablish a financial management framework of provincial rural credit cooperatives with thesupport and supervision of national policies, and to construct diversified regionaldevelopment patterns of rural credit cooperatives. Chapter3: The reform course of management system in rural credit cooperatives.Through reviewing the history, the government's orientation in management system reform ofrural credit cooperatives is summarized. It is argued that the motivation ofgovernment-oriented reform of rural credit cooperative can be ascribed to two reasons: firstlyit is required by government's absorption of rural capital and financial risk prevention, andsecondly the rural credit cooperatives lack support from cooperated economic activities for along time and thus demand government-oriented behaviors. The rural credit cooperativestherefore face the double reform goals: policy reform and benefits reform.Chapter4: Analysis of the double reform goals of management system in rural creditcooperatives. Double reform goals of rural credit cooperatives' management system areexplored, e.g., the credit-loan-assisted agriculture policy goal, and the sustainabledevelopment benefit goal. By using VAR Model, credit-loan-assisted agriculture policy goalis further discussed, and it is found that credit-loan-assisted agriculture takes slight impact onagricultural economy development, thus it is necessary to improve the efficiency ofsupporting agriculture by credit loan. At the same time, the sustainable development benefitgoal is also analyzed theoretically and it is suggested to eliminate bad assets and build ruralcredit cooperatives into multi-form shareholding commercial financial institutions.Chapter5: Shareholding system reform in rural credit cooperatives. Incorporatingdisputes on ownership reform of rural credit cooperatives, it is argued in this paper thatinvolvement from cooperative system to shareholding cooperative system and finally toshareholding system is in line with the development path of modern commerce and finance.Investor behavior-based shareholding system reform equilibrium analysis shows that thecooperative value of stock right and the synergies of shareholders' contribution restrict theresult of shareholding system reform of rural credit cooperatives, resulting in separatingequilibrium in the financial institution market of rural credit cooperatives.Chapter6: Corporate governance structure perfection evaluation in rural creditcooperatives. Based on the organization structuring, rights and duties structure andmanagement environment, Probit model was used to analyze the corporate governancestructure of the sample rural credit cooperatives. The result shows that democraticmanagement of staff member; internal personnel control and HR management are moreinfluential to the corporate governance structure, wherein the improvement of corporategovernance structure needs to focusing on clearly specification of the staff, clerks and seniormanagers' rights and duties.Chapter7: The optimization of the management system in rural credit cooperatives.Looking through the management system of rural credit cooperatives at town, county and provincial levels, it is believed that the present township rural credit cooperatives arelow-efficient, while the county rural credit cooperatives meet the problem of upward shift ofdecision making, provincial rural credit cooperatives confront with the problem of unclearpositioning of management power and functions. The management system that provincialgovernment manages rural credit cooperatives at county provincial levels that further managethe grassroots institutions is of great reference value since it is the most orderly. Finally it isput forward that some changes should be made on the regulation of rural credit cooperativesby China Banking Regulatory Commission which, though has such rights, is free from anyresponsibilities, while Provincial Credit Cooperatives should be encouraged to fulfillindustrial self-discipline functions.Chapter8: Evaluation of pluralistic reform pattern and regional differences in rural creditcooperatives. In combination with the policies on reform patterns of rural credit cooperatives,it is believed the anticipation of shifting rural credit cooperatives into rural commercial banksor rural cooperative banks may probably be an unrealistic illusion, and the unified corporatemode is still feasible. Referring to the development path of shareholding system reform ofrural credit cooperatives, this study performs factor analysis and clustering analysis of thesample rural credit cooperatives in Shaanxi Province. Accordingly the following conclusion isdrawn: the imbalance of economic development is significantly affecting the distribution ofthe three reform modes of rural credit cooperatives.Chapter9: Policy recommendations for deepening the reform of management system inrural credit cooperatives. Based on summarization of the previous paragraphs, some policyrecommendations for deepening the management system of rural credit cooperatives areproposed: optimizing the rural financial ecosystem, building diversified rural financialmarkets, improving government's policy supports, enhancing the governments' management,and promoting constitution of cooperative financial rules and regulations.