Governmental Behavior And The Impact On Efficiency In The Institutional Change Of Rural Financial System

The development of rural financial market has a strong and direct impact on the agricultural production and rural economy of countries around the world, that explains why governments lay emphasis on it during the institutional change of their financial system. We can learn from these countries that the rural financial markets that invloves the participate of commercial banks, non-commercial banks and RCC are characterized by multi-level and high efficiency. Since goernmental behavior dominates the imposed institutional change of our financial system, it should be the driving force during the institutional change of our rural financial system. It can be seen from the rebuild of ABC, the deepening reform of property right system, and the pilot project of small-credit companies and rural banks. Governmental behavior could reduce the cost of institutional change in our rural financial market within a shorter period than expected. However, evidence show that governmental behavior may be related with institutional disequilibrium and the dissimilation of cooperative financial institutions. It means that governmental behavior may be negative related with the institutional efficiency.To analyse governmental behavior and its impact on institutional change, we first refer to the theoretical fundamentals of New Institution Economics. We investigate the corelation of institutional change theory and the actual situation of our rural financial market. Then we focus on the empirical analysis of RCC of Shandong Province to see the impact of governmental behavior on institutional efficiency of rural financial system. The comparative analysis and the data-embracing analysis are employed in this part. We can conclude from the empirical analysis that governmental behavior do have a direct but insignificant relationship with institutional efficiency, and that if rural financial institutions aims to enhance institutional efficiency, they should first improve their management level and financial services to farmers, agriculture and rural areas. Finally, we make several suggestions on the construction of rural financial system and the improvement of institutional efficiency.