| Finance is the core of modern economy. Economy determines finance and finance counter-react to economy. Keeping a virtuous cycle between economic system and financial system is very important both to a country's economic and financial development. A fine financial system can effectively promote economic development, contrariwise, high risk degree of financial system will restrict economy's sustainable development ability. The rural finance, as the hardcore of modern rural economy, is the important capital factor allocation system in development of rural economy, shoulders the important tasks during construction of new socialist countryside. However, the rural finance faces many problems such as deficient supply of rural finance, lower service ability of rural financial institutions, high risk level and etc., which largely restricted development of rural economy. During the seventies and eighties of the 20th century, "Micro-finance Institution revolution" appeared abroad, which changed the traditional commercial bank's philosophy of "never favoring wealth over poverty". Then, researching the rural micro-financial services theory, combined with the status quo of China's rural financial risks to explore the micro-services in rural areas of risk prevention and security system, has important theoretical and practical significance.1. Main contentsThe dissertation includes two parts of preface and text. The preface first sets forth foreign and domestic background and significance of the subject, then reviews foreign and domestic studying state about the subject from such four sides as the theory of rural finance development, the impact of rural micro-financial institutions, the poverty alleviation and sustainability of rural micro-financial services, China's rural financial risks. Finally it expounds features of studying methods, main innovation or contribution.The text contains six chapters. Chapterâ… is Changes in the rural financial system and rural micro-financial services market. First it introduced the changes in China's rural financial system, as well as the emergence of micro-financial institutions, and then under the condition that the Government of China to support development of financial institutions in rural areas, and then defined the rural micro-financial services to the basic concepts, as well as the overall situation of our country, the end, Hebei Province, three County for the investigation of samples for analysis of China's rural micro-financial services market. This chapter is the logical starting point of the whole text, which establishes necessary theoretical foundation.Chapterâ…¡is basic theories of rural micro-financial services. First, it studied the phenomenon of financial repression in rural areas, and the conditions of establishing branches in rural areas for financial institutions using mathematical models. Secondly, it refined the theory of rural micro-financial services model and makes a corresponding evaluation. Then, it made three indicators for the measure of rural micro-financial service's the effectiveness:coverage of power, sustainability and welfare effects, and analyses the various effectiveness. Last, it studied the path selection of rural micro-financial services. This chapter is the theoretic starting point of the whole text, which establishes necessary theoretical foundation of risk prevention.Chapterâ…¢is research on the risks of the rural micro-financial services. First, the chapter defined the concept of financial risks in rural areas and found that China's rural financial risks are high risk, strong diffuse, internal relevance, supply shortages and the characteristics of hidden etc. Then, it researched the status quo of China's rural financial risks using two methods including normative analysis and empirical analysis. Normative analysis of China's rural financial risk, mainly analyzed the providers and environment of the rural micro-financial services.As the main provider, state-owned commercial banks away from rural grass-roots culture-an acquaintance of social circle, face a higher risk of asymmetric information, while the dissertation analyzed the risks for agricultural policy bank and rural micro-finance institutions.About the supply environment, the dissertation analyzed the special risks arising from the environment gaps between the rural and urban areas. In the process of empirical study, the chapter reached the following conclusions through the establishment of panel econometric model using the provincial data of Agricultural Bank of China before spin-off non-performing loans in 2007:firstly, the level of economic development directly affects the marketing capacity of financial institutions, quality of credit assets and profitability. Secondly, in the provincial economic level, the assets quality of bank credit among 2002-2006 improved significantly. With the exception of joint-stock reform and asset stripping of ICBC, BOC and CCB, economic growth and credit expansion increase the size of the bank's profitability, as a whole to reduce the risk of financial institutions. Thirdly, to absorb a considerable part of the cost of reform result in more non-performing loans of financial institutions, and become the historical burden of commercial banks, especially the state-owned commercial banks. To ABC, the impact is more evident.Chapter IV is risk prevention study of the rural micro-financial services-based on the perspective of financial institutions. First of all, we must improve the complementary mechanisms of risk for rural financial institutions. Since there are large differences between areas, regional economic development level is not quite the same pace, it is impossible for the majority of rural areas to provide effective financial services. Therefore, in order to overcome the adverse effects of the rural areas "financial repression", we must establish a diversified financial system and the corresponding complementary control mechanisms. Then, the chapter proposed to build an effective model of participation of micro-financial services for financial institutions, namely, policy-oriented financial services, agriculture, banks, credit unions, non-formal finance, and innovation of financial institutions etc.. Finally, the chapter analyses the two main risk management patterns-market risk and credit risk management strategies.Chapter V is the security system of the rural micro-financial services-Based on the regulator perspective. This section studied the building of the security system for the rural micro-financial services from the point of regulator. First, in the process of building rural financial supervision system, relying supervision demands confirmed by new and former Basel Agreement, we need establish efficient multi-risk control system, that is, to set up a efficient risk control system under the basic frame of new Basel Agreement and in accordance with financial features of rural areas, establish and strengthen internal management structure of financial institutions and perfect basic management starting with credit risk control, to build restriction mechanism that takes supervision, check and responsibility as core, perfect credit extension mechanism, and expand the risk control range to various risk control market risks, and operation risks step by step. In accordance with the different levels, the supervision system must perfect the supervision system to the former financial institutions, and incorporates the informer financial institutions into the frame of supervision system. Then, the chapter explored the establishment of deposit insurance system and full playing to the role of the central bank as a lender of last resort. Last, as the main supplement of the supervision system, regulatory authorities should guide financial institutions to establish and improve the rural financial sectors self-regulatory mechanism, improve the effectiveness of supervision for purpose of enhance risk control capacity of rural financial institutions in all-round.Chapterâ…¥, which is the last chapter of the dissertation, is conclusions and policy recommendations. The main conclusions of dissertation include:(1) There are more obvious differences as the dual economy between urban and rural areas in China, urban and rural financial service system are also; (2) Current efforts to improve the supply of rural micro-finance level and reconstruction of rural financial system are carried out in accordance with two main lines; (3) The current policy orientation is to solve the problem of inadequate supply for the rural micro-financial services in a relatively short period of time. As a political arrangement, it puts forward a clear time requirements and adopts a mandatory system under the government-led change-based model, which inevitably browns a greater amount of executive power; (4) Regulatory issues are critical to the healthy development of micro-finance. With the increasing of the number, types, products and services of financial institutions, these problems become new challenges to the regulatory system that includes the protection of the interests of depositors and the liquidation for poor organizations. The main suggestions include:(1) Government should support financial institutions for "Three Agriculture Problems" by implementing proactive fiscal policy, stimulate the enthusiasm of developing agriculture-related business and diversify risk at the same time; (2) Strengthening the law construction, strengthening the institutional basis of financial ecology, protecting the legitimate rights and interests of financial institutions; (3) Comprehensively promoting the construction of credit system, standardizing financial ecological credit order and preventing the credit risk; (5) Building an ethical culture, laying the cultural foundation of risk prevention.2. Main innovation or contributionThe main innovation or contribution of the dissertation may reflect in the following aspects:First, the dissertation proposed that defects of rural micro-financial services are currently the emphasis and difficulty in the building of the rural financial system out of the original binary classification of urban and rural finance. It is difficult to establish a unified model of rural financial development in our current level of economic development in rural areas by analyzing the risk situation of rural financial institutions and rural micro-financial activities. We should establish a wide range of mixed-type rural financial system to meet the demand for financial services for different levels of economic development in rural areas through combination and complement of national institutions, local agencies and institutions of civil. The characteristics of rural micro-financial activities require to be more relying on "grassroots" type of micro-finance institutions. Micro finance institutions need overcome the risk factors of the rural financial system by products, technology and institutional innovations and achieve sustainable development objectives and continuously improve the coverage.Secondly, the dissertation researched the status quo of China's rural financial risks using two methods including normative analysis and empirical analysis. Normative analysis of China's rural financial risk, mainly analyzed the providers and environment of the rural micro-financial services. As Empirical analysis, for the lack of the overall data about rural micro-financial services, the paper only selected the data of ABC in 2007 before large-scale divestiture of non-performing loans for learning the true face of risk about rural micro-financial services.Finally, the dissertation examined in depth the problems ecological environment construction of rural financial. The market mechanism is the basic direction of the development of the rural financial system. But under the current economic conditions, a large number of financial ecological environment in rural areas is still insufficient to support market-oriented financial institutions. Therefore, the central government should work together with local governments, financial institutions and rural clients to build healthy and orderly environment for rural finance and raise the level of economic development in rural areas.
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