An Empirical Study On Comprehensive Operation Capality Of Rural Credit Cooperative In Enshi Tujia And Miao Autonomous Prefecture

Study about rural financial has been a continuous hot task for a long time. With theoutbreak of the financial crisis, governments strengthened the importance of sound andsustainable development of the financial institutions when they were dealing with thecrisis. Rural financial is the most important part of rural economic and is the weakestsector of the financial system in China, so Comprehensive operational capacity of ruralfinancial institutions has been increasingly concerned by communities. As one of themost important part of China’s rural financial system, rural credit cooperative hasspecial economic background and credit characteristics, which performed as small sizeof unit loan and natural-risk repayment abilities. At the same time, heavy history burden,fault property rights system, bad asset quality, weak profitability, high non-performingassets ratio as well as defective Management mechanism are significant problems ofrural credit cooperatives. In minority rural areas, single mode of economic developmentand unbalanced development are also factors which restrict the development of the ruralcredit cooperatives. Poor asset quality, and operational risk of rural cooperatives inminority areas not only restrict the healthy operation of the local rural economy, barriersto the development of rural financial, but also become an important factor to hinder thedevelopment of local social harmony. Therefore, finding the factors which affect theassets quality and profitability of rural credit cooperatives in minority area is of greatsignificance to enhance the integrated operational capability of rural credit cooperativesin minority areas, promote local economic development, and maintenance of thenational regional social harmony.This paper took rural credit cooperatives in Enshi Tujia and Miao AutonomousPrefecture, a minority area in Hubei province, as study object, proposed the indicatorsthat had a close relation with the profitability and assets quality of the rural creditcooperatives by factor analysis, and then analyzed the correlation cause of thoseindicators. Based on the financial report of rural credit cooperatives in Hubei provincefrom2006to2011and the correlations between above indicators and the two factors,profitability and asset quality levels of rural credit cooperatives in Enshi area wereanalyzed by comparing with the average level of Hubei province. The reasons for therestrictions to enhance profitability and asset quality levels of rural credit cooperatives in Enshi Prefecture were found out, and then corresponsive measures and feasibleproposals were put forward. The conclusions of this paper could act as a guidance toimprove the profitability of rural credit cooperatives in minority area and to prosper therural financial market.