Study On The Problem And Countermeasures Of The County District Finance's Shrink

This thesis paper studies the problem of financial shrinking at county levels. The objectives of the research are: expatiate the manifestation of financial shrinking at county levels; analyze the impact of financial shrinking by using statistical and econometric methods; investigate the basic countermeasures. Based on economic growth theory, financial development theory and the theory on sustainable development of financial industry, using qualitative and quantitative methods, this paper analyzes the impact and causes of the financial shrinking problem at county levels, and puts forward policy measures.1.research results(1) The development of county economy is dependent upon county finance. The development of county economy determines the development of county finance. And county finance can restrict or promote the development of county economy.(2) County finance is shrinking. This is demonstrated through the shrinking of financial institutions, power shrinking and capital shrinking. The core is the decrease of loan supply to counties.(3) The financial shrinking at county levels seriously affects the development of county economy.(4) There are several reasons leading to the financial shrinking at county levels. Firstly, the low performance of county economy restricts the supply of capital. Secondly, the tightening of loan control limits loan supply to counties. Thirdly, transaction costs are high between enterprises and banks. Fourthly, the social credit environment is unfavorable.2.policy measuresAs a kind of scarce productive factor, credit money runs through the whole process of economic and financial activities. Solving this problem requires the cooperation of different departments and different factors. This paper proposes countermeasures from different angles. The policy measuresare as follows:(1) Speed up structural adjustment of agricultural economy, and promote fast development of rural economy. Firstly, the role of government should be changed. Secondly, the establishment of social service system should be promoted to provide information service to farmers. Thirdly, speed up structural adjustment of agricultural economy to increase farmers' income.(2) Improve the performance of county enterprises. Firstly, county SMEs should carry out technical innovation. Secondly, county SMEs should undertake restructuring. Thirdly, credit guarantee system for SMEs should be established.(3) Restructure county financial system to support county economy. Firstly, the role of agricultural policy banks should be expanded. Agricultural Development Bank of China should assume more responsibilities for agricultural industrialization and infrastructure construction. Secondly, the reform of rural credit unions should be enhanced. Rural credit unions accumulated alarge amount of risk in the past. Now, they have to change their ownership system according to theirown circumstances. Thirdly, state-owned commercial banks should change mentality and improve credit management system. County branches should have more freedom to supply flowing capital loans in a certain range. They should also strengthen their service consciousness. Moreover, the coordination between risk constraint mechanism and incentive mechanism of supplying loans should be improved.(4) Build favorable credit environment to elevate the support of finance to economy. Firstly, local governments should decrease administrative intervention. Secondly, favorable credit environment requires the support of law. Thirdly, information disclosure system of the whole society should be established. Fourthly, credit registration and consultation system should be utilized to guard against credit risk.