The Problem Of Supervision On Rural Small And Medium-sized Financial Institutions

Rural finance is the core of the rural economy and the important part of the entire financesystem; it plays a huge role in the process of construction of new socialist countryside. Ourcountry’s rural financial system has the obvious progress with the deepening of the ruralfinancial system reform. But some problems have not been resolved because of the feeblenessof agricultural industry. These problems still exist in rural areas, for example the supplyshortages of rural finance, inadequate competition. In recent years, rural small andmedium-sized financial institutions develop rapidly, in particular, some new type of ruralfinancial institutions were established widely, so new requirements are put forward for ruraland small-sized financial institutions. Various financial powers need regulate through theformulation and implementation of financial regulatory policy. So the supervision on ruralsmall and medium-sized financial institutions has become the hot-spot problems.This paper introduces some theory that related to supervision on the rural small andmedium-sized financial institution, on this base, this paper analyze the present status ofsupervision, the problems in the regulatory process and the cause of these problems. Inaddition, the paper also introduces the supervision mechanism of the developed countries andproposes some regulatory experience for reference that combined with the actual situation inour country. Finally, the paper analyzed the optimal supervision pattern that made use of theprincipal-agent model, and the paper also put forward relevant policy suggestions from theimprovement of the regulatory body, the perfection of rural and medium-sized financialinstitutions themselves and the construction of harmonious regulatory environment.