The Reform And Development Of Rural Cooperative Banks

The reform of China's rural credit cooperatives has gone through nearly 20 years, from Restoration of Three Features in 1996 to Three Reform Models in 2003 and then to Expansion of the Experimental Areas in 2004. With the reform being under way all the time, it is always unable to meet the objectives of the policy designers. At present, there still exist problems in the rural credit cooperatives such as unclear property rights, imperfect structure of corporate governance, improper management system, heavy historical burdens, and poor asset quality. On how to solve these problems, there are both disputes and consensus in theorist circle. Most scholars acknowledge the fact that the cooperative system, which meets to the most extent of the financial service demands from many small and vulnerable economies in rural areas, is bound to be the main form of rural finance, surviving for a long time and continuing to develop, due to the facts that China's agricultural economy is poorly market-oriented and the traditional agriculture still plays a dominating role in the vast central and western regions. While rural credit cooperatives, as the core power of this financial system, will support and serve Agriculture, Rural Areas and Farmers.However, due to various historical reasons and the gaps between theoretical and actual situations, the cooperation in China rural credit cooperatives becomes a mere scrap of paper. How to keep the cooperative system of the rural credit cooperatives and how to effectively solve the existing difficulties and problems becomes the top priorities of the reform. Thus, the rural cooperative bank, as a new kind of local financial institution that both adheres to cooperation principle and also adapts to joint stock system reform, mounts to the stage of history. Its existence is undoubtedly one of bold tryouts during the reform of China's rural credit cooperatives, and also an effective supplement to the present rural cooperative financial system. However, it must be stressed that, from first to last in this paper, the joint-stock and cooperation system of the rural cooperative bank is believed to be a transitional product rather than a mature rural credit cooperatives reform model, only meets the current needs of China's economic and financial development. In other words, it is the reality that has led to the combination of "cooperation system" and "joint-stock system". However, the combination has its own contradictions and shortcomings that are difficult to get rid of by itself. With the rapid development of various industries in China, the rural cooperative banks are bound to be replaced by rural commercial banks when China's economy is highly market-oriented and rural financial demand reaches a higher level. This process may be lengthy, but the trend is inevitable.Although the joint-stock and cooperation system will die in the long course of history, at present, it is still a bold innovation, and this innovation is consistent with the current situation in China. Its existence will help to push forward the reform of rural credit cooperatives. In the majority of central and western regions, even in some parts of developed coastal regions, restructuring the rural credit cooperatives to be rural cooperative bank is still the preference of its reform. Therefore, the research and analysis of rural cooperative bank are still of practical significance.In this paper, with the good opportunity provided by the study on the reform achievements of Ziyang Yanjiang Cooperative Bank, the background of the establishment of the rural cooperative bank and its significance for the reform of the rural credit cooperatives are analyzed, and the status quo of the current development of and the major problems facing by the rural cooperative bank and their causes are studied. With appropriate reference to the successful experience of village banks in Bangladesh, the U.S. and Japan, measures and corresponding suggestions for perfecting the reform are proposed, with an expectation to provide a reference for the reform of rural credit cooperatives.Although the topic of the reform and development of rural cooperative bank is approached from the aspects mentioned above, due to my limited knowledge, the possible biased understanding of the knowledge may be inevitable and there may be some mistakes. I entreat review and academic defense experts to point out mistakes so that they can be corrected. For the future work, I will continue to enrich my knowledge, perfect my knowledge structure, improve my comprehensive quality, and spare no efforts to explore the reform of China's rural financial system and regulate the development of rural cooperative banks.