Western Rural Financial Repression And Financial System Reconstruction

Since the reform and opening-up, the national economy of China has achieved a great deal. But the "three agricultural problems" has been becoming an important issue holding back the economic development of China. In the recent years, the proportion of rural economy has been declining in the national economy, and the economic development has been slowdown in the western rural areas with the gap of income between urban and rural residents broadening in the eastern, central and western area. There are many reasons for the slow growth of the western rural economy, one of the most important factors lies in rural financial issues. Rural finance, which has been proved to be effective in converting savings to investments, is of critical importance in such process. However, the financial repression is more series in the western rural area. Now the present state of rural finance is worrying with most of the formal commercial finance quitting rural area, the policy finance (CDAB) limited in a small managing area and the rural cooperative finance, the only formal institution that does business with farmers, operating in difficulties due to the poor property management and other reasons, low level of financial services in rural areas, a large amount of capital loss in rural areas, the government controls on interest rates and credit distortions significantly. To resolve the rural financial repression, it isnecessary to promote the western rural financial deepening, rebuild China's western rural financial system.This paper, is base on the theory of financial deepening and financial repression. By the analysis of rural financial deepening of the western areas and the use of empirical analysis inhibited to reveal the western rural financial situation, in light of this situation, the policy proposals to promote rural financial deepening.In drafting the specific arrangements, this paper include the following four parts. The first part is introduction, which includes the explaining of the purpose and significance of the paper, the part that review and sort out the relevant documentation. This part also described the scope of the study, the research methods and the main ideas of the articles.Chapter I : This part first described the theoretical basis for the main text —the theory of financial repression and deepening, then described the features of financial repression and deepening, the logic of the implementing of the policy based on the financial repression, also the economic effect of financial deepening. The aim of this part is trying to find a reference to the western rural finance development of the theoretical basis.ChapterII: By the combination use of theoretical analysis, empirical analysis, qualitative and quantitative analysis means, this part aims to reveal the present situation of rural financial deepening in the west, then explain the reasons for the rural financial repression in the western.chapterIII: this part include some policy proposals that aim to solve the problem in financial suppression, such as opening rural financial markets, rebuilding a multiple rural financial service system, reinvesting in rural area by setting up special system, implementing differential monetary policy and strengthening financial supervision.