Research On Financial Exclusion In China Minority Areas

The concept of financial exclusion is the product of the society entering a certain stage. It was first proposed by the countries just as Britain and the United States with a high degree of finance and widely used. Learning from western theories and contacting our actual, we studies the formation mechanism, the effects and the solution of financial exclusion in order to not only meet the strong demand of the population or regional suffering from financial exclusion, bust also meet the demand of our China society continue to develop further and further. China is in a transition period. The problems of urban-rural gap, polarization between the rich and the poor, unbalanced regional development and so on are increasingly become a stumbling block to the further development of our society. Financial exclusion is not only the expression but also the cause and effect of the unbalanced society. Up till the present moment, some domestic financial exclusion of literature mainly with the background of the urban-rural dualistic structure focused on the financial exclusion in rural and the difference of urban and rural financial exclusion. Others may focus on the relationship of the gap between the rich and the poor and financial exclusion in the view of microcosmic individuals just as farmers and urban residents. Relatively speaking, the financial exclusion of literature from the point of view of the unbalanced economic and social development among different regions is rare.China is a unitary multinational country. Ensuring rapid economic growth in minority areas is the important part of All-round Construction of Well-off Society. It also has important tactic significance to consolidate the great unity among ethnic groups, maintain social stability and reduce the regional disparity. We can't ensure rapid economic growth in minority areas without the support from financial system. Owing to historical reasons, it is always difficult to get financial services and financial exclusion is widespread and serious in minority areas. So the paper from the point of view of the unbalanced economic and social development among different regions combs theories of financial exclusion and literatures on the development of the finance in minority areas thoroughly. We study the minority areas in our country using the financial data at provincial level or county level.In the paper, we explore the current situation, influencing factors and aftereffects of financial exclusion in minority areas both normative analysis and positive analysis applied. And so we throw out some suggestions to treat financial exclusion in minority areas. The main conclusions are as follows.(1) Overall, there are joys and worries for the current situation of financial exclusion in minority areas. But relatively speaking, the current situation of financial exclusion in minority areas is very serious and urged to treatment. The analysis of the distribution of financial branches in minority areas shows that:The financial branches distribution density is very low, but the population density reaches the national average level; Rural Credit Cooperatives, State-owned Commercial Banks and Postal savings institutions almost monopolize the financial supply of the market in minority areas; Shareholding commercial banks are far away from the minority areas by market mechanism; The reform to institute a stockholding system in Rural Credit Cooperatives lag behind fails to keep up a pace; Those policy-banking institutions lean to the minority areas;The cooperative finance, new rural financial institution especially village banks and rural mutual cooperatives increase rapidly in minority areas. The analysis of the financial practitioners in minority areas shows that:The number of financial practitioners in minority areas is less than the normal; but in the view of the financial service, enterprises get better financial service than residents in minority areas. The marketing exclusion more or less behaves as the exclusion to individuals. The analysis of deposits and loans of financial institutions in minority areas shows that: The total of deposits and loans of financial institutions in minority areas is in a low level, the financial development is below the national average level; But the outflow of credit funds in minority areas is weak in all; State-owned Commercial Banks hold a leading post in Credit Market of minority areas, and those policy-banking institutions play a role of providing the funds. Postal savings institutions, Urban Commercial Banks and Urban Credit Cooperatives are the main channels through which the funds in minority areas flow out. Judging from the whole financial exclusion in our country, the degree of financial exclusion in minority areas is higher than which in other areas. From the trends of financial exclusion's evolution, financial exclusion in our country is allayed with the deepening of financial reform in recent years in China. But compared with other areas or the whole country, a downward trend to financial exclusion in minority areas is obviously weaker. All of those indicate that the current situation of financial exclusion in minority areas is still very serious and should be urged to treatment.(2) Financial exclusion is a systematic problem. The influencing factors include in Politics, economy and culture and so on. So the solution to financial exclusion in minority areas can not only copy the experience of the developed countries. We must give a correct solution based on the development of the minority areas themselves. At the aspect of economy and finance, the higher level of incomes f residents, the better status of the employment, the higher degree of urbanization, the fuller competition of finance and the more perfect financial facilities indicate the degree of the financial exclusion is low. The competition of finance is a very important factor in the paper. It appears in an obvious negative correlation with financial exclusion. This result indicates that the serious financial exclusion seems as the consequence of decreasing the branches of State-owned Commercial Banks, but in fact, the financial exclusion are more likely caused by the lack of financial market competition in minority areas. At the aspect of society and culture, the higher level of education, the thicker commercial culture and the less of Muslim make the less financial exclusion. All above factors are positively related to financial exclusion, which indicates not only the economy but also the development of society and culture can influence the degree of financial exclusion. Among the factors, the variety of faith plays an important role, which is positively related to financial exclusion. It shows that the Islamic areas suffer from more exclusion of finance. At the aspect of governmental regulation, the support of local government can relieve the financial exclusion, and the more efficient government work leads to the less financial exclusion.(3) Financial exclusion has negative impacts on the development of local economy and the increasing of residents' incomes. So we should take measures to relieve financial exclusion and enhance financial inclusion. But in minority areas, the financial risk may increase with financial inclusion. Therefore, the key problem of governing financial exclusion is how to build a risk prevention mechanism in the process of enhancing financial inclusion. The empirical analysis of financial exclusion's impact on the development of economy in minority areas shows that:financial exclusion hinders the upgrade of industries structure and causes the less economic aggregate; but the relief of financial exclusion cannot bring a higher growth rate immediately, it may take a long time to achieve obvious effect on economic development, so many local officials have little interest in governing financial exclusion. The empirical analysis of financial exclusion's impact on the residents'incomes in minority areas shows that:financial exclusion inhibits the increase of resident income obviously; but it doesn't widen the gap in income distribution, on the contrary, it narrows the gap. This result is different from that in other existent documents, which indicates that the financial market in minority area is still in the early stages of development and it's hard for both urban and rural resident to access to essential finance service. The empirical analysis of financial inclusion'impact on financial risk in minority areas shows that:the financial risk increases with the improving of financial inclusion; but a favorable legal and intermediary environment can prevent and reduce the financial risks effectively.(4) In order to relieve the financial exclusion in minority areas, local government should bring in competitive system for financial institutions in these areas. On the one hand, the coverage of finance service should be widened, on the other hand, the decision-making capability of customers should be improved and the financial risk should be controlled too. We believe that under the promptings of market competition the coverage of finance service will be widened and the management level of financial institutions in minority areas will also be upgraded.