Research On The Efficiency Of Rural Finance Of Hubei Province

As a large agricultural country, China's economy as well as its social stability, development and modernization are influenced fundamentally by three dimensional rural issues, ie issues concerning agriculture, the countryside and farmers. It entails the backup of finance to develop the rural economy and to increase farmers' income. Finance is the core of modern economy and it determines the tempo and efficiency of economic development to a great extent. In today's market economy, financial efficiency is playing a decisive role in the process that finance boosts the development of economy. As an important component of modern finance, the rural finance is the key force to advance modernization of agriculture and is playing an unreplaceable role in the development of agriculture and the rural economy. The contributions made by rural finance to promote rural economy is manifested through the efficiency of rural finance. The level of the efficiency of rural finance is the essential factor that affects the development of modern agriculture. However, currently, the supply of rural financial resources is insufficient and a large number of rural funds become non-agricultural for the reasons that the reform of rural finance is lagged behind the development of rural economy and the rural fund is driven by profit. The rural fund is relatively scarce and it flows out of the countryside through every possible channel, which blocks the development of rural economy. In recent years, the income of farmers grows slowly and fiscal support for agriculture is inadequate. Under these circumstances, the efficiency of rural finance arouses the interest of many scholars. Therefore, it is of great importence to raise the efficiency of rural finance in order to promote the development of rural economy and to boot income of farmers.Based on the theories of financial development and rural finance, this thesis carries out empirical analysis about the efficiency of rural finance in Hubei Province. In empirical analysis, it first carries out factor analysis and detects the tendency of efficiency of rural finance in Hubei Province. Then, it finds out the relations between the level of rural finance of Hubei Province and the growth of rural economy through multiple regression analysis. Finally, it summerizes the empirical analysis made above. Based on the analysis above, it searches for factors that restrict the efficiency of rural finance of Hubei Province. At last, it makes propositions and suggestions to enhance the efficiency of rural finance of Hubei Province. The main conclusions made in this thesis are as follows,First, from 1995 to 2007, the efficiency of rural finance of Hubei Province shows a tedency of downward to upward.Second, since the end of 20th century, the efficiency of savings converting to invesment of Hubei Province has continued to decline, and it is the worst chain of the efficience of rural finance of Hubei Province. Third, the efficiency of investment contributes most remarkablely to the growth of rural economy, while the efficiency of savings converting to investment is the least.Fourth, the main internal factors that restrict the efficiency of rural finance of Hubei Province consist of insufficient supplies of rural financial resources, the outflow of rural funds, the asymmetry of information in rural financial market, the incompleteness of rural financial service and so on. External factors encompass the low development level of rural economy and imperfectness of the credit environment in rural areas.Fifth, to raise the efficiency of rural finance, it is necessary to take various measures, including cultivating a competitive rural financial market, reforming rural financial institutes profoundly, as well as optimizing the rural financial ecological environment, such as providing stable macroeconomic enviornment, establishing and optimizing credit system and strenghening financial spervision.