The Choice Of The Business Model Of Rural Credit Cooperatives And Its Peripheral Support

Cooperative finance has a history of over 100 years and the experience of its success varies from country to country. Having developed for more than 50 years in China, especially after the reform of financial system, Rural Credit Cooperatives (RCC) has made a great contribution to the rural economic development in China. It is, however, faced with many accumulated problems which need solving as soon as possible. In June 2003, the State Council made No. 15 document public, "An Experimental Plan of Furthering the Reform of Rural Credit Cooperatives". The plan chooses the Rural Credit Cooperatives in Zhejiang Province and other 7 prefectures as an experimental reform and with that started the new round of the reform of Rural Credit Cooperatives. By the second half of the year 2004, the area of experimental reform extended to 29 provinces or prefectures. The purpose of the reform is to reduce the loads of Rural Credit Cooperatives and maximum the supporting function of Rural Credit Cooperatives to agriculture. The selection of operation mode will help put the above purpose into practice and it also decides the operation concept of Rural Credit Cooperatives: aiming at pursuing profit maximum or mutual development. As for the selection of mode, scholars put more concern on the system as a whole, while the authority of Rural Credit Cooperatives hasn't made the final decision, but four choices have been provided (ranking from top to down) in the Plan, namely rural commercial bank, rural cooperative bank, county-level sub-branch consolidated corporate, the original state. Rural Commercial Bank Mode fits in economically developed areas; County-level Sub-branch Consolidated Corporate Mode can find its way in those developing areas; Rural Cooperative Bank Mode is suitable in the areas between the above two. Most areas in China belong to developing ones, therefore when it comes to the selection of operationmode, the first choice for Rural Credit Cooperatives should be county-level sub-branch consolidated corporate, rural cooperative bank comes second, and rural commercial bank ranks the last.Expanding reform covers a series of projects and many problems are beyond Credit Cooperatives, such as local government function, the legal position of Rural Credit Cooperatives, the standard operation of RCC provincial branch, the interrelationship among commercial finance, policy finance and cooperative finance. However, RCC can make efforts to build a better credit system for civil finance and individual peasant and the system building is a very important external surrounding for RCC.This dissertation consists of four chapters: chapter one points out the purpose and significance of writing the dissertation and it also presents an introduction to the research background home and abroad as well as the research methods used; chapter two introduces several types of cooperative finance from which we can learn something useful; chapter three is a brief review of the history of RCC in China; chapter four is the focus of this dissertation and it compares and analyzes the relationship between operation modes and economic surroundings through case study in some typical areas; chapter five puts forward some assumptions about RCC's external surrounding which is of great importance for RCC's development and whose change is within the reach of RCC. In the last part, conclusion, I bring out the suggestion that as far as the current economy in China is concerned, most RCC should mainly choose cooperative mode as their operation mode.