A Study On Development Of China's New Rural Financial Institutions

After 30 years'economic reform and opening up, China's achievement in economic development drew worldwide attention and people's living standard grew significantly. With all the great progress, some problems also have come up during the development, of which the most urgent is the increasing economic gap between the urban and rural areas. In the vast rural and country areas, the economy is under developed and people live in poverty and cannot enjoy the great outcome brought by the reform and opening up policy. Stepping into the 21st century, the government pays more and more attention to agricultural, rural areas and farmers. Accelerating economic development, transforming mode of development, increasing people's income of rural areas to build a harmonious society becomes the priority of the government.For a long time, the financial sector is under-developed in rural areas, which constrains its economic development. Rural areas'economic progress cannot be achieved without the support of financing-the breach for developing economy. However, problems like low coverage rate and lack of competition in financial services continue to exist for a long time. In order to increase the supply of financial services and activate the market in rural areas, China Banking Regulatory Commission (CBRC) adopts Adjusting and Relaxing the Access Policies for Banking Financial Institutions in Rural Areas. It encourages and guides the social capital to establish new financial institutes like banks, loan companies and rural mutual cooperatives in rural areas.These new financial institutes set foot on the country side areas, target clearly on providing services to farmers and small and medium-size companies. Compare to large ones, the new rural financial institutions have characteristics of small in size, flexible in operating, close to farmers as well as the advantages in information and low cost. They can develop various financial products according to various clients'needs.Since the founding of the first rural bank in March 2007, the new rural financial institutions have been popping up across the land in China. The fast growth of financial institutions not only fills the blank of financial services, it also creates a competitive market environment in rural areas. These effects powerfully support the economic development of rural areas and make significant contributions to the balanced development of China's entire economy. While, some problems such as weak in risk control, the difficulties in follow-up financing and lack of sustainable development has come up in the developing progress of rural financial institutions.The author of this article, on the basis of research findings relative to rural financing both at home and abroad, thoroughly explored China's financial market in rural areas, pointed out the necessity of building new rural financial institutions in rural areas of China and argued the feasibility and positive points in developing rural financing institutions. As a newborn thing in rural financial market, the new rural financial institutions will come up with some inevitable problems. Aiming at the problems and risks in the development of China's rural financial institutions, the author proposed some relevant ideas from both macro & micro point of view.