System Of China's Rural Financial Market Distortions

Three decades of reform and opening up brought China's remarkable economic achievements, but during this process there appeared a lot of problems, the issues concerning agriculture, countryside and farmers are very prominent. The constraint of the underdeveloped rural financial market on rural economy is a very important reason why the development of rural economy lags behind that of the urban area, it also counts for the slow growth in the income of farmers. So in order to promote the economic development and increase the income of farmers, it is necessary to reform China's rural financial market. At present, the majority of rural financial needs have not been satisfied because of the institutional distortion in China's rural financial markets. the fundamental reason for this is that during the past three decades of institutional reform led by the government, the financial needs of rural areas were not taken into complete consideration. The arrangements of formal financial institutions deviated from the actual needs in rural areas. Non-formal financial developed rather well although it was inhibited for a long time. A wide range of non-formal financial existence is the result of rural financial distortion, so it demonstrates the institutional distortion of China's rural market.Based on previous research, the author makes a comprehensive analysis of the reason why rural financial market is distorted and points out that rural financial market reform should be carried out with the starting point of satisfying rural financial needs. For the reform of formal finance, it must be made clear that the responsibility of formal financial institutions should be serving"three rural"and exploring financial innovation to realize this responsibility. For non-formal finance, it should be supervised and formalized rather than be banned or repressed blindly. Eventually the integration of formal and non-formal financial markets will be realized which will improve China's rural financial market and make it more efficient.