A Study Of The Development Of Rural Banks: Functional Perspective

In the third stage of the reform after the year 1997, it began with rural banking institution in the state-owned commercial banking reform and considerable removal and combination of the offices, especially the offices of Agricultural Bank of China shrank so that the vacuum of the rural banking institution emerged, causing the non-economical phenomena of abating the competition and banking services in the rural financial market as well as the critical outflow of the rural funds. On the 20th,December 2006, China Banking Regulatory Commission enacted the NO.90,2006 Document "Several Opinions concerning Adjusting and Broadening the Access Policy to Rural Banking Affiliated Institutions to Better Support the Construction of the New Socialist Countryside ", which symbolized the new round of rural banking reform. This round of the reform released the "access" and "capital" policy in rural banking system, and developed the new rural banking institutions, such as rural banks, loan companies and mutual-aid groups of rural funds. Furthermore, 1300 new rural banking institutions will be established natioanwide at the end of the year 2011 in the NO,72[2009] document enacted by CBRC, including 1027 rural banks amounting to 79%. Consequently, how significant the development of rural banks is, how bright the future is!It has been four years since the rural banking systems was created, during which a multitude of problems were encountered, for example, absorbing the deposits was difficult, settling the accounts was difficult and they were not very popular to the mass. However, these kinds of problems can be tackled by technological promotion or active publicity, which belong to the "non-core problems" in the development of rural banks, while the core problems consist of how to develop the rural banks in order to truly promote the banking financial service system of multiple inveatment, various kinds, comprehensive coverage, flexible administration as well as efficient service in the rural areas, genuinely promote China's rural banking market to be a scene of a hundred flowers in full bloom.Based on the financial functional analysis as the rationale, the author has studied the issue from the pointview of how to perfect the function of the rural banking systems. During the study, by fieldwork reaserch and survey, reading documents, consulting the yearbooks, surfing online and some other media, the author collected a multitude of material and expounded the issue systematically through theoretical analysis, quantitative inspection and case analysis, during which the author has given a innovative demonstration concerning the issue of the character, the status and the feature of rural banks as well as the government's motivation of developing the rural banks, in conclusion, the present mechanism is not able to solve the above-mentioned problems so that developing rural banking system from functional pointview should be advocated.The article consists of six parts. In the first part, the study background, significance, thought, method and specific study structure are raised. The second part expounds the character, status and features of rural banks and points out that rural banks, as the county-levelled small business banks, serve as an important part of the national business banking systems. In the third part, the paper analyzes the government's motivation of developing the rural banks. It is irreplaced that the government perfect the function of the rural banking systems through developing rural banks. Furthermore, the author has found the mechanism between the rural banks and the fuction of rural banking systems.In the forth part, through the case analysis, four kinds of typical modes and two kinds of non-typical modes in the state present rural banking system will be summed up, and its function in improving the rural banks will be tested. The fifth part will analyse the developing thought that the "capital restriction" of the present rural banking mechanism should be removed to really open up the capital access to the rural financial market, present the "financial freedom" to the general public, prevent the financial risks through various monitoring and administration measures for its sound and stable development, which is the best thought to improve the rural financial system and perfect its functions it deserves.