Study On The Effects Of Governments On Rural Mutual Founds Development

There is a serious shortage of rural formal financial supply in china, and farmers generally face the formal financial problems. Therefore, since2006, China launched a new round of rural financial system, its main content is to relax banking financial institutions in rural areas, and thus access guide and encourage village banks, finance companies, rural fund cooperatives and small loan companies, etc. Among these, the rural mutual funds are truly cooperative financial, significantly different from government-led rural credit co-operation of the virtual model.From the current development situation, there are two types of rural mutual funds, one is under the framework of the CBRC and has the financial license of rural mutual funds, and the other is promoted by the local government and built outside the framework of rural mutual funds. Although the two types of rural mutual funds have made some progress, but there is a lack of funding, weakness risk control, slow development of rural mutual cooperatives and rural mutual funds outside the framework of the CBRC, and a series of problems.During the initial development phase of the rural mutual funds, there is a great relationship between the emergence of these issues and the impact of government. This paper focuses on the development of the government’s rural mutual funds to analyze the impact of the subject. There are two specific research questions:(1) what is the indirect impact which is given by the Government to the rural mutual funds?(2) what is the direct impact if the government make some specific actions on the rural mutual cooperatives?For the first question, based on the Smith’s theoretical model, combined with the policy changes of rural mutual, we analyze the major impact from government. Study found that, the current impact of rural mutual development policy is the main regulatory restrictions on deposit interest rate policy (including dividends) shall not be higher than bank deposit rates, as well as external financing policies either do not allow or not to implement, making it difficult for a rural mutual funds to realize external financing. In this case, the emergence of mutual funds in rural areas lead to the shortage of funds, it is difficult to effectively meet the credit needs of their members, thus resulting in less attractive for farmers, lack of endogenous force, arrested development. In reality, rural mutual funds appeared "marginalized" signs and "cottage Bank". Research also shows that it is necessary for the rural mutual funds to crack the problem of external financing and relax the restrictions for deposit rates.The second question, this paper put forward the proposition and combined with theoretical analysis, a typical case study method validation of ideas to conclude that rural mutual funds should be within the health environment, government should play a major guide in initiating the development; it is unreasonable for rural mutual funds directly to the government to provide cheap financing approach. Government in rural mutual funds established to provide technical assistance, including help to establish a standard internal operating mechanism, managers and members of the education and training.