A Study Of The Theory And Practice Of Chinese Rural Cooperative Finance

China is an agricultural country, so to solve the problems of agriculture, ruralareas and farmers are the basis of developing various works. The "twelfth five-year"plan proposes to fasten the new countryside construction, increase rural incomes, andimprove agricultural modernization level. For now, rural China is in financialrepression, farmers’ rights of receiving credit and financial services are not protectedand rural economic development is restricted by the undersupply of rural finance to alarge degree. Based on the researches home and abroad, a sound financial systemcould prompt economic development. Rural financial system is constituted bycooperative finance, business finance, and polity finance; and judging from theexperience of developed countries, rural financial market development dependsmainly on rural cooperative financial system. In view of the extremely unevencondition of Chinese rural economic development and the opportunity of ruralindustrial structure adjustment, how to construct a rural cooperative financial system with high level and wide covering during the rural financial system reform hasbecome an issue must be faced with and dealt with in the construction of socialismnew countryside.Rural cooperative financial organization follows the principle of mutualcooperation, nature of non-profit and voluntary join of farmers. According to thecriteria of whether an organization is within the regulation scale of national financeregulators, rural cooperative finance is divided into formal rural cooperative financeand informal rural cooperative finance. In China, the dominant formal ruralcooperative financial organization is rural credit cooperative (RCC), which hasexperienced times of system reform and finally establishes a system consisted offirst-level legal person RCC, second-level township legal person RCC, ruralcooperative bank, and rural commercial bank together. RCC after reforms has aprofit on the face of it, but it still can’t meet the increasingly capital needs of ruraleconomic development. Informal finance as an irregular rural cooperative financialorganization plays a significant complement role in rural financial market; however,informal finance implies high financial risks which are against the sounddevelopment of the market. Therefore, based on a theoretical and practical analysison rural cooperative finance home and abroad, this paper explores how to integrate the formal and informal rural cooperative finance into a whole to solve the loandifficulty issue in rural. Meanwhile, this paper proposes to prompt the financedeepening in rural financial system reform to eliminate rural financial repression.In this paper, theoretical perspectives of many subjects such as Marxistphilosophy, finance, political economy, and western economics are quoted, researchmethods such as materialistic dialectics, combination of empirical analysis andnormative analysis, combination of dynamic analysis and vertical analysis, andcomparative analysis are applied, rural cooperative finance is the research object,relevant research results home and abroad are analyzed, Marxist cooperativeeconomy, westerners’ cooperative guideline, and rural financial theories are set totheoretical basis points, and the operational mode of rural cooperative financialsystem in developed countries are learnt. Based on these mentioned and from theperspective of formal and informal rural cooperative finance, this paper focuses onanalyzing deeply the development process, current situation, and problems ofChinese rural cooperative finance. After all these works, several suggestions aboutpath selection of Chinese rural cooperative financial development are finally raised.By reforming formal rural cooperative finance and normalizing informal finance, areasonable and efficient rural cooperative financial system can be established and sound financial services can be provided for both the construction of a new socialistcountryside and improvement of agricultural modernization level.This paper is composed of seven chapters as follows:Chapter1is the introduction part, which mainly states the background andsignificance of this paper, analyzes and summarizes the research status of ruralcooperative finance home and abroad, and illustrates the research methods and ideasapplied throughout the paper. At the end of this part, innovations and disadvantagescontained are listed and research scale is specified.Chapter2first defines the concept of cooperative economy, cooperative financeand rural cooperative finance, then states the theoretical points from the perspectiveof Marxism cooperative economy, western cooperative economy, and relevant ruralfinance theories, which lays the groundwork for the research followed.Chapter3analyzes and learns from the operational practices of ruralcooperative financial system in developed countries such as German, American,France and Japan, then, further summarizes the specialties and successful experienceof each, which enlightens the Chinese rural cooperative financial system. This partproposes to construct an independent cooperative financial system, strengthengovernment support, clarifies property duties of financial institution, objects to agriculture and farmers, establish and improve regulation and risk preventionmechanism, and perfect relevant legal system.Chapter4divides the development of RCC from the founding of new China tillnow into the following stage: trial implementation and popularization, tortuousdevelopment, adjustment during reform, independent development, and deepen thereform; development background and reform effect of each stage is evaluated, andthe achievements in Business Condition, capital resources and agriculture supportafter the new round of reform are summarized.Chapter5introduces the current forms and characteristics of formal andinformal rural cooperative finance, then, further clarifies the predominance of formalcooperative finance, and indispensable supplement role of informal cooperativefinance in rural financial market.Chapter6summarizes the difficulties in rural cooperative financialdevelopment, which includes the disadvantages of formal rural cooperative financein property relations, operating management, industry supervision and developmentenvironment, as well as the problems of informal rural cooperative finance in policyand legal protection, operating management, and risk control.Chapter7proposes the future path selection of formal and informal rural cooperative finance respectively. Formal rural cooperative financial institutionshould clarify property relations, reform operating management system, perfectsupervision, and improve development environment. Informal rural cooperativefinancial institution should build a legal platform, guide a regular development, andinnovate a normalized mode for informal rural cooperative finance.The conclusion part is a brief summary of the whole paper, and it aims topropose policy suggestions for the development of Chinese rural cooperative financejointly pushed by formal and informal rural cooperative finance.