Study On The Relationship Between Rural Commercial Banks And Local Governments

The rural commercial banks, as the outcome of the reform of rural creditcooperatives can be regarded as an innovative transformation of the Chinese financialstructure. During this transformation, the local government played a critical role in thedevelopment of the rural financial system. Therefore, it is vital to understand therelationship between the rural commercial banks and local government, so as toimprove the Chinese financial services.This essay focuses on the relationship between rural commercial banks and localgovernments without any judgemental perspectives. More importantly, a pragmaticapproach has been undertaken through decentralised framework, to examine thedevelopment of rural commercial banks, and the interventions of the local government.This research starts with key development difficulties faced by the rural commercialbanks, analysing in two different perspectives. With the understanding of the difficulties,the intervention of local government is further evaluated, and recommended policies aresuggested to enhance cooperation between the two parties.In order to gain deep insights of the relationships between the local governmentand rural commercial banks, several aspects will be discussed. Firstly, the Introductionmainly clarifies the significance of the topic, the basic concept, relevant literatures,theoretical framework and research approach; then, Chapter One shows theachievements and difficulties in the development of relations between the ruralcommercial banks and the local government, focuses on the plight of rural commercialbanks, which presented as inappropriate intervention of local government, as well assupply-demand contradiction of local financial system; Chapter Two emphasizes on thecauses of rural commercial banks’ plight, local government’s intervention can beillustrated by the "Restriction of Value Orientation" and "Tendentious Behavior Mode", as well as the bureaucratism work style; Chapter Three conducts an empirical study onrelationship between Kun Shan Rural Commercial Bank and local government; finally,based on the interpretation of the previously proposed, Chapter Four tries to offer someadvice to promote benign interaction between rural commercial banks and localgovernment.