A Probe And Analysis Of China's Rural Credit Cooperatives' Corporate Governance Structures

Cooperative Finance is of great importance to promote to our national economic development, at the same time China's rural credit cooperatives are the main force of rural cooperative finance and are also financial ties of peasants, which shoulder the important task of increasing the peasants'income, building up agriculture and stabilizing the countryside.The indistinct property rights have long since been conflicting with independent legal person status, which is the radical handicap for the development of China's rural credit cooperatives. The pilot reform beginning in the year of 2003 was intended to solve that issue.. the indistinct property rights led to the lack of rural cooperatives'owners, the imperfect ion of corporate governance and serious internal control, which greatly affected the development and risk prevention of rural credit cooperatives and even the while rural economy. It is imperative to resolve the existing problems in corporate governance structure, to build up a new type of corporate governance structure which not only embodies cooperation principles but also abides by the operational rules of modern enterprise system, to set up a operational mechanism of clear property rights relationship, capital adequacy, sound governance structure and sustainable financial development.This paper firstly introduced the general theory of corporate structure, and gave a theoretical analysis of governance structure of China's rural credit cooperatives from the perspectives of property rights theory, principal-agent theory, theory of stakeholders on the management structure. After analyzing the status quo of the governance structure of rural credit cooperatives, the paper pointed out of the problems and faults: the unclear main body of property rights, severely imperfect property rights system, the lack of effective long-term incentive and restraint mechanism, the serious internal control and so on. With the theories of"the change of path"and game theory, the causes of the status quo had been discussed on a basis of in-depth study. After that the author put forth the target design of the rural credit cooperatives'governance structure. In the end the paper laid emphasis on how to select the internal and outer paths to perfect the governance structure, with measures as follows: improve outer environment of governance, clarify the main body of property rights, reconstruct the checks and balances of power, introduce in effective incentive mechanism.The paper can be divided into six parts, and each part's contents are as follows:Chapter one: Introduction. This part introduces the background and significance of this selected topic and points out the research method, the main ideas and innovation in this paper, then gives a review of domestic and international theories related to governance structure.Chapter two: Theoretical analysis of governance structure of rural credit cooperatives. From the standpoints of property rights theory, principal-agent theory, theory of constraints incentives, stakeholder theory, this part analyzes the framework of corporate governance structure theoretically and elaborates on the basic principles and the fundamental features of cooperative finance's organization, management, operation. Combined with China's national conditions, the author points out the socio-economic foundation and institutional basis on which cooperative finance exist in our country.Chapter three: Status and Problems of governance structure of China's rural credit cooperatives. This part firstly looks back to the course of China's rural credit cooperatives, and then expounds on the basic mode of governance structure and it's framework relationship, secondly it provides an analysis of pros and cons on the three main modes (cooperative, joint-stock cooperative system, joint-stock ) of the governance structure in China. Lastly, it focuses on the defects and problems of China's rural credit cooperatives'governance structure.Chapter four: The causes of problems of China's rural credit cooperatives'governance structure. From the theoretical knowledge and practical level, this part analyses The causes of problems of China's rural credit cooperatives' governance structure by using the framework of game theory and the theory of the change of path, then reveals that the combination of mandatory changes and induced is needed regarding the path choice of the governance structure'regulation.Chapter five: The design of corporate governance structure of China's rural credit cooperatives. Using the Basel Committee's assessment on corporate governance structure of Commercial Bank for reference, this part provides the main contents of evaluation system on the governance structure of China's rural credit cooperatives. A static design for the corporate governance of rural credit cooperatives has been carried out according to stakeholder model.Chapter six: The path choice as to the reform of China's rural credit cooperatives'governance structure. To better the outer environment of China's rural credit cooperatives, we should propagandize the financial policies of China's rural credit cooperatives, regulate government'acts and improve the regulatory body functions. In rural credit cooperatives ,we should take measures such as clarifying property rights, remodeling the "three-council system", establishing a mechanism of motivation so as to gradually consummate the governance structure of China's rural credit cooperatives.