Study On Rural Financial Repression Of China

Since the reform and opening-up, the national economy of China has achieved a great deal. But the "three agricultural problems" has been becoming an important issue holding back the economic development of China. In the recent years, the proportion of rural economy has been declining in the national economy; the gap of income between urban and rural residents has been broadening, especially in the medium and upper-term of 90's, the absolute income of fanners descended. There are many reasons for the slow growth in the rural economy. One of these important reasons is the problem of rural finance. At present, the rural finance in China meets with many problems. There are limitations in rural financial organizations, the state commercial banks withdraw their rural sub-branches; the Rural Credit Cooperatives' assets are poor; the Agricultural Development Bank cuts its policy service; the Post Savings is allowed to take deposits but not to crediting; all of the problems directly lead to the capital flowing from rural to urban areas; and the farmers are difficult to get credit from formal financial institutions; the private finance is active, which leads to greater financial risk and so on. The root of rural financial problems is financial repression, which exists in the dual economy of China. The financial repression counterworks the rural economy. In order to develop the rural economy, we must release the rural financial repression.The process of this paper research is: on the basis of financial repression and financial deepening theory, it reviews the level of financial development of rural China by empirical research, draws a conclusion that there is financial repression in rural China. Then, according to the financial demand investigation of farmers in ShanDong province, it analyzes the display, influence, and reasons of financial repression in demand; and from a systematic point of view it studies the financial repression in supply. At last, it puts forward some policies and advice to release the financial repression and to promote the financial deepening. The main conclusions of the paper are as follows:Firstly, there is financial repression in both demand and supply existing in rural China. The financial repression is the rational choice of both demanders and suppliers, according to the benefit maximization of their own.Secondly, according to the financial demand investigation of farmers in ShanDong province, 4 sorts of farmers and 3 sorts of financing channels are marked. Different kinds of farmers choose different financing channels, based on their different financial...