Research On Rural Cooperative Finance Development Patterns In China

Dual economic structure is a significant character of Chinese economy. To improve the rural economy, which is lagging behind in urban present, development of rural financial service system is a priority. For a long time, RCC (Rural Credit Cooperatives), as a kind of cooperative financial organizations, is the main financial institutions in China’s rural areas. Whether the current reform of RCC aiming for commercialization and the foundation of New Rural Financial Institution can provides high quality financial services for rural economy is still uncertain. Cooperative financial organizations with its unique property rights nature have played an important role in many countries’rural financial fields. Different countries have formed different specific development patterns, including the "Pyramid" pattern in Germany, the "two broken whips" pattern in France featuring the partnership of government and private capital, the multi-compound pattern in the US, etc. Can China develop cooperative finance? Which type of pattern should be adopted? This requires in-depth analysis of China’s rural economic and social conditions. Based on past historical experiences and lessons, we should make scientific design of the system. Powerful evidences support that China needs to and has the situation to develop cooperative finance:Theoretically the purpose of cooperative finance is to provide financing services for members but not for profit, in response to inadequate rural credit under business organization; Local nature and cooperative nature of cooperative finance can help to overcome asymmetric information problem and thus have credit advantages over commercial Banks; Cooperative finance organizations have successful operation histories in many countries; The new round of rural financial institutions reform with foundations of New Rural Financial Institution still has many problems, the existing RCCs are still the main channels of financing in rural areas; Mutual funds which are spontaneous cooperative financial organizations have showed advantage for rural financial service.One innovation of this research is through summarizing existing domestic and foreign research of cooperative finance to explore China’s rural cooperative financial development pattern, which is called Literature Proof Method. I got the following basic conclusions through literatures:First, cooperative finance is not normal financial institutions, the profit maximization model is not suitable, cooperative financial organizations need to consider its membership benefits; Second, the size of the cooperative financial organizations have significantly effects on efficiency, thus we need to consider the problem of economies of scale in the design of cooperative financial system; Third, cooperative financial organizations have obvious information advantages in rural market; Fourth, China’s credit cooperatives problems in the past lies mainly over the problem of management, not the property rights itself. We can improve efficiency through the adoption of advanced management experiences and advanced technology. Another innovation is the in-depth analysis of China’s rural financial market supply and demand situations, thus the exploration of the development pattern of cooperative finance based on economic facts. China’s rural cooperative financial development has the mission for rural society to realize fund accommodation, optimize the allocation of resources, service rural economic development, and help the disadvantaged groups. In the background of rural financial system reform, this paper questioned the thoughts of the overall business bank orientation, and put forward a new frame to develop rural cooperative finance. There is an urgent need for cooperative finance legislation to create a good institutional environment. On the one hand, it is need to encourage the development of spontaneous rural cooperative finance such as mutual funds. On the other hand, we need to pay more attention to the reform of original credit cooperatives. Endogenous and exogenous finance development should be unified through appropriate patterns and constitute the rural financial positive development patterns.