Research Of Rural Finance In China

The rural finaneial system reform has experienced the evolution of complex poliey Since 30years'reform and opening up, but so far it still is the very weak link of the entire rural reform and development.At present, the rural reform and development has entered a new stage of institutional innovation.Accelerating the pace of financial reform in ruralareas and building a modern rural financial system have become the important topic in next reform of rural areas.In the proeess of economic construction,Finance is the core issue of economy development.Rural finance is crucial to the solution of "three-dimensionalrural issues".It is a central concern in the rural economy development and plays a key role in the realization of rural modernization.At present,because of the restrainsplaced on rural economy by government,banking system,and external environment,the potential of rural finance is greatly inhibited.The rural finance system is unsoundin supplying,unfair in rationing,unreliable in formal financing.Within the rural finance system,the mightiness of commercial finance is weakened;the capacity of policy finance is limited;cooperative finance,with its own constrains,is uneasy to beadapted to the needs of the rural development;private finance,with its systematicflaws,is unable to reach its full strength.All above show that we need a newperspective to examine current financial system,a new understanding of the future ofrural finance to innovate rural financial system,to deepen finance revolution,tofacilitate the healthy development of finance market.This work hopes to present someworthy results to motivate further research on rural finance and help gear our financial system to international standards,which has practical significance.Form the angle of demand and supply,this work employs empirical analysis,static and dynamic analysis,comparative analysis,micro analysis,and macro analysis to analyze the rural financial system. On the basis of a thorough clarification of the contents and features of rural financial system,this work reviews the history of our rural financial system,examines the current state of finance demand and supply in rural area,finds out the drawbacks,and puts forward my perception,that is the main reason for the unbalance of our rural financial system is the inhibition of finance supply.Addressing the essential causes,I advise the option of rural financial system innovation.Based on the analysis of rural financial institutions,the article researches on the following areas:(1)Relative to the"binary"economy structure of urban and rural areas,this article uses the concept of the urban finance relative to the rural finance.From the financial activities of the rural financial market,the rural finance includes direct and indirect financial banking.On the other hand,from the rural financial system,different types of financial institutions,including the formal and informal finance,obtain information from different sources,thus affecting the efficiency of the financing. Information asymmetry is an important factor affecting the operational efficiency of financial markets.The paper points out that information asymmetry is the greatest difficultly for formal financial institutions withdraws from and accesses to the rural economy.(2)Studying the system of China's rural financial institutions reform process, because of prohibiting the rural cooperative foundations, large-scale commercial financial institutions from rural areas and a large number of rural capital's outflow from the rural economy.From a historical perspective,the strategy to address the "Agriculture,Rural areas,Farmers"difficulties in financing should be to build a diversifying rural financial organization system to meet the needs of all types of rural finance.(3)The farmers'financial needs depend on the comparison between their income and expenditure. By investigating the rural in North China Plain,it is found that the rural household income is greatly uncertain so that the farmer family credit demand is not fully effective,because of the information dissemination not smooth in the rural areas.The study about Hebei Province finds that the township enterprises are facing great difficulties in financing,and that information asymmetries and financialrepression is the major cause,of which the former is the primary reason.(4)Learning from other scholars'studying ways,the narrow money(M1)is taken as a main reference to the main financial indicators,and the economic and financial relative proportions are calculated.We compare the financial supply,including the formal and informal financial institutions, with the demand.Then it is shown that China's rural financial market is still in short supply imbalance,and that the supply and demand gap is the further expansion trend as time goes.As adverse selection and moral hazard arising from the information asymmetry,there are different operational mechanisms at the two relatively isolated markets.Because of information superiority,the informal financial institutions distinguish the different types of the farmers when they loan,and they tend to choose the market-based farmers.Formal financial institutions also tend to loan to the market-based farmers,but they can not use interest rate to distinguish the different types of the farmers because of informational asymmetry and the interest rate non-marketlization.(5)Through the study of the signal transmission model,from the financial standpoint,the information screening mechanism can be built as long as the signal transmission is turned the other way round,effectively reducing the adverse selection.Combining the incentive and monitoring mechanisms into the design of the credit contract at the same time will increase the dependence on the information,the farmers'getting the output share and monitoring signals are interrelated in the design of the credit contract.During the implementation course of the credit contract,the extent of the farmers'hard work has nothing to do with the credit loan obtained from the financial institutions,and then this can effectively reduce moral hazard.(6)In both developed and developing countries,from the experience of resolving successfully the financial difficulties of rural areas,their rural financial systems have a diversified characteristics,and most countries have divided into the rural financial policy,commercial,cooperation and micro-finance organizations.The diversification of rural financial institutions,credit channel diversification,is the main characteristics of the U.S.financial system in rural areas.Germany financial cooperation is the mainstay of rural finance.Japan's agricultural finance has a strong financial cooperation of the agricultural association system,and the government's financial policy,the two complement each other.India's rural financial system is typical of the developing countries'rural financial systems because it is a highly developed system.The micro-credit model of Grameen Bank is the main features of Bangladesh rural financial system.