Study On Rural Financial Deepening Policy And Path By Xie Yumei

The article focuses on rural financial deepening and from a marco perspective analyses the impact of the nation's rural financial development on the economic growth. The "theory-cause and status quo analysis-policy proposal" approach is applied and the normative and positive analysis is made by comparing. The research results of foreign scholars. The article begins with the financial depression causes, explores the factors and effect of the rural financial depression, and the readjustment of the rural financial deepening policy in the scenario of economic restructuring. By case study, it also probes into the financial deepening paths being taken and the impact of the financial deepening policy on the participants in the rural financial market. Finally, the article proposes the corresponding approaches to the issues in the financial deepening process of the nation. The article includes eight chapters with reference to domestic and overseas research and literatures.Chapter 1 is an introduction and Chapter 2 is a summary of related studies.Chapter 3 construes the causes of the nation's rural financial depression, economic transformation and rural financial policy adjustment. According to the financial depression theory, government intervention leads to financial depression, which is witnessed and verified by the nation's rural financial market development and evolution. This chapter, from a theoretical point of view, analyses the causes of government intervention with examples of such practices in the developing countries. Based on the compulsory substitute model of government control, the chapter discusses the resource allocation, compulsory substitute methods and effect in the nation's rural financial market, as well as the policy readjustment to suit the rural economic transformation.Chapter 4 sets the financial deepening indexes and builds the economic growth model. Based on the model, the correlation between financial development and economic growth is discussed. The result shows that there is a long-term stable relation between them. Therefore, we should push forward rural economic growth by financial deepening-this is the development trend of the nation's financial market.Chapter 5 addresses the rural financial deepening path, that is, the reform of the rural credit cooperatives' property right. China differs somewhat from other countries in financial deepening. China's financial deepening kicked off in the scenario of transformation economy and the rural financial deepening approaches characterized by weight the institution within the system were intervened by the government in the beginning. The government-intervened reform addresses the discrepancy between regions; therefore, it is difficult to make a general analysis of all regions. This chapter discusses the issues in the reform, using three models favored by the government.Chapter 6 addresses another rural financial deepening path, this is, rural market interest rate liberalization. Compared with the nation's interest rate, the rural market interest rate liberalization is prudent and step by step becomes the trend of the rural market interest rate reform after a few pilots. This chapter uses some example to illustrate the relation between the interest rate, rural deposit and investment, as well as the responses in different rural regions to the interest rate liberalization since October 29, 2004.Chapter 7 discusses the impact of the ongoing financial deepening policy on the participants in the rural financial market. Some rural regions in Wuxi and Yangzhou, Jiangsu Province are selected for a study on whether there are constraints in financial farms and rural firms. This research does not cover many samples, but is based on door-to door interviews, which reflects the status quo of similar regions.Chapter 8 points out the obstacles in the nation's rural financial deepening. In the new round of country construction, the financial model should change. Some approaches addressing the financial deepening are proposed to suit the new situation. Conclusion:1. The government's compulsory substitute policy results in two kinds of efficiency loss in terms of the rural financial resource allocation:(1) On the PPF, the low efficiency due to the difference between the actual allocation and the desired allocation caused by the compulsory substitute policy, this paper calls it "the Nash equilibrium efficiency loss".(2) Inside the PPF, the low efficiency due to insufficient utilization of resources or unemployment, the inefficiency gap in supply and demand of the rural financial market is thus formed.2. The conclusion shows that there is a positive relationship between rural financial development and rural economic growth. It means that we can improve farmer's income and increase economic growth through financial deepening. The policies include reforming rural financial market system, enlarging financial supply, changing financial institutions property rights and taking floating interest rate.3. The goal of the new rural bank interest rate reform and the supplant effect that the regular financial market has on the irregular financial market are indeterminate. When the external environment remains unchanged, raising interest rates does not produce the supplant effect, but instead, in underdeveloped areas, causes a sort of "poverty trap".Based on the research mentioned earlier, this thesis presents the following solutions and approaches:1. Rethink the role of the public financial policy. To sustain a harmonious development of the industry and agriculture, of the urban and rural areas, and to increase farmers' income with rural economy growth, the finance remodeling is indispensable. The new-country construction must not follow the traditional rural financial model, that is, the expansion of rural public product supply is mainly achieved by the public finance. In the public finance sector, which is regulated and controlled by the government, only after the new financial policy and new financial techniques are applied can low efficiency and corruption be avoided in the implementation of the public financial policy.2. Form a competitive and open rural financial market. Build up a long-term effective rural financial service system suitable for the new-country construction by innovating the financial system, fostering competitive entities in the rural financial market, redefining the function of the rural financial sector, and floating interest rates.3. Lower the threshold of market entry and restructure the rural financial regulation system. In view of development, we should learn experience and lessons from foreign rural financial market regulation practice, attach importance to legislation and management, and set up regulation standards prudently. In accordance with the nature and size of financial institutions, multiple flexible regulation methods should be applied, such as government's regulation, industrial regulation, supervision by shareholders and the management, self-discipline, and mutual supervision.