China's Rural Financial System

As many research works show, financial system is playing an important role which advances the development of the economy. The development of economy limits and determines the development of finance, while the latter has an accelerating effect on the former. The sound financial system can effectively absorb the rural savings and put capital into the production sectors. The good cycle is so important to the development of economy and finance. But the financial inhibitions lead to the lack of development of economy and finance in the developing countries. The main task of the rural finance is to solve the vicious cycle problem between rural economy and rural finance. In the world, both developed countries and developing countries, all attach importance to rural finance. China can learn from the foreign rural financial institutions.Since the reform and opening-up, the reform of rural finance is deepening, and the scale of the rural finance is enlarging. The rural finance has given enormous contribution to the rural economy and China's economy. Now, China is setting up a rural finance system including the cooperative, the policy-based and commercial finance. However, the rural finance still does not meet the needs of the rural economy. Therefore, the reform and reconstruction of rural financial institution is as well an urgent problem that should be solved in our country as respect to financial reformation and rural economical development.This article is composed of five chapters. In chapter one, the author clarifies the background, meaning and studying method, etc. Chapter two, introduces some relevant concepts and theory of institution change. Chapter three, describes the course and characteristic of financial institution change occurred in China's rural area. Chapter four, analyzes the existed questions and defects of rural financial institution in our country. Then put forward some policy suggestions and feasible approach of reconstructing China's rural financial institution in chapter five. For instance, push innovation of property rights, reconstruct rural financial systems, reinforce financial supervision, increase the capital flow into rural area and strengthen agricultural insurance, etc.