Performance Evaluation Of China’s Rural Credit Cooperatives

Rural Credit Cooperatives(RCCs) are an important part of China’s rural finance,the most important task of RCCs is to solve problems facing agriculture,rural areas and farmers.The RCCs has preliminarily shown vigorous development with the support policy since 2003.Rural loan are increasing.Rural financial market are improving. The meeting of how to construct socialism new rural areas at April 2006 suggest several targets of RCCs until 2011.These targets includes good management,high quality assets, institutions reform,farmers financial support,right frame work of corporate governace et al.RCCs is going to be commercial bank with the same rules of supervision, the five-category assets classification for bank loans, the commercial banks capital requirements,in order to promote the reform of RCCs, improve the quality of assessment criteria, enhance the transparency and public credibility of financial support. At the present time,the method of RCCs performance evaluation is issued and implemented by Ministry of Finance at Dec 25,2009.The method relegate RCCs as commercial bank.The performance indicator system is almost financial indicators. The evaluation result is according to the financial industry’s standard. Because this method is not including non-financial indicators,the evaluated can not be predicted scientifically.This paper start with the theory of performance evaluation,then to analyze the system by modern principles of management in order to find the defect of performance evaluation system currently.By combined financial indicators with non-financial indicators is to built a theoretical frame suitable for China’s RCCs.This theoretical frame include profit planning, operating status, credit management, human resources, market competitiveness and service capacity.This paper end with the empirical analysis and the countermeasure and suggestion.The conclusion of this paper is as follows.The first is weight coefficient of currently performance index system unsuitable for RCCs.The second is index system including economic performance, asset quality, financial solvency, growthiness and internal controls,market competitiveness, innovation ability,staff inner quality suitable for RCCs.The third is creat a new method of weight coefficient, named quadric secondary weight.The fourth is combined financial index system with non-financial index system.This paper also has limitations.The index system interrelated or un interrelated with the performance evaluation is not certified.The non-financial index is not suggested by committee of experts. Analytic hierarchy process (AHP) with vague mathematics is not proved.