An Empirical Study Of The Support For The Rural Economy From Rural Finance In Anhui Province

Ever since2004, the Central Document No.1has been taking the three rural issues asthe theme for the past eight years and focusing on developing the rural economy. Duringthese eight years, the rural finance has gone through considerable development. Meanwhile,its contributions to the rural economic development have been gradually manifested.However, with the development of market-oriented economy, some problems concerningabout the rural financial market have arisen, such as the evacuating of a large number ofbanks from the villages and towns in rural areas, the flowing of a large amount ofagricultural capital into the non-agricultural sectors, etc. which make the support of therural financial development for the rural economic development inconspicuous. In thispaper, on the basis of an analysis of the status of rural financial development in AnhuiProvince made by the PEST-SWOT method, this paper makes an empirical analysis ofAnhui rural financial support for the rural economic development using data from1995to2010. GDP in rural areas of Anhui Province is used as a measurement of its economicgrowth and three variables, namely, the rural financial scale, structure and efficiency areselected as the indicators to measure the financial development in rural areas so as to builda linear model to conduct an empirical study. The conclusions are as follows: First of all,the contribution of rural financial development to the economic development in rural areasof Anhui Province is not obvious. The development of GDP in rural areas of AnhuiProvince can promote the benign development of the overall rural financial scale in AnhuiProvince. Secondly, each additional unit of GDP in rural areas of Anhui Province cancontribute to an additional unit of the overall rural financial scale in Anhui Province andalso contribute to an additional unit of the rural financial efficiency in Anhui Province.Thirdly, the development of structural adjustment of rural finance in Anhui Province andits contribution to GDP in rural areas is in a negative linear relation, but not necessarily acausal relationship.Through an analysis of the problems encountered during the rural financialdevelopment in Anhui Province, this study reveals the following problems existed in therural financial development in Anhui Province. The rural financial structure system inAnhui Province has serious problems; the development of rural financial in AnhuiProvince is seriously lagging behind; the promoting function of rural financialdevelopment exerted on the rural economic development in Anhui Province is not distinct; the efficiency improvement of the rural finance is not obvious. Using the FinancialDevelopment Theory, Economic Growth Theory and market economic theory, this papermakes an analysis of causes of problems in the rural financial development of AnhuiProvince, which can be summarized as the following aspects: the low income of the ruralfinancial market lead to the slow adjustment of the rural financial structure; insufficientsupplies of the rural finance in Anhui Province results in that the rural finance can not playits role in promoting the development of the rural economical development; theUrban-rural dual structure leads to the serious lagging behind of the development of ruralfinance; the imperfections of Anhui’s rural financial market competition order leads to itslow efficiency.In view of the countermeasures to promote the rural economic development by thesupport of rural finance in Anhui Province, this paper puts forward some suggestions andcountermeasures using PEST. In view of politics and laws, laws and regulations in theformal financial sectors and the informal financial sectors should be improved; theinfrastructure construction of rural finance in Anhui Province should be strengthened; lawsshould be formulated to prevent capital outflows. In view of economic markets, it issuggested that a financial organization system in which the formal financial sectors can bedeveloped in conjunction with the non-formal finance and the aggregation index of theformal financial sectors continues to be lowered should be build. In view of thesocio-cultural aspects, this paper suggests that strengthen sense of participations of farmswith the guidance of grass-roots government such as the village committee and thetownship government; enhance the awareness of development of credit unions and otherfinancial institutions and cultivate the corporate culture of the rural services. In view of thetechnological innovations, this paper suggests that strengthen the financial innovation andprovide products and services with varied species and categories; introduce some advancedrisk management means to control credit risk in rural areas; innovate the forms of financialservices.