Research On The Policy Of Functional Development Of New Rural Financial Institutions In West Regions Of P.R.China

In recent years, the issue of agriculture, farmers and rural areas has been one of the coreconcerns in China’s development, and the rural economy is getting increasingly important.Also the rural finance has been the hot spot in the development of rural economy. However,the rural area in China is still facing a series of problems like the insufficient supply in themarket, shortage of the relating service, and so on. To improve the supply in rural financialmarket and meet its needs, China Banking Regulatory Commission ratified the founding ofnew rural financial institutions, such as village banks, loan companies, and rural credit unionfunds, etc. in2006and small loan companies in2008. Besides, Ministry of Finance of thePeople’s Republic of China, China Banking Regulatory Commission, and the People’s Bankof China have launched various supporting policies including the financial policy, monetarypolicy, and supervision policy, etc. which has issued the regulations from the perspectives oftax, subsidy, deposit reserve, and interest rate. Nevertheless, the problems and weaknesses ofthose supporting policies are being exposed with the development of the new rural financialinstitutions.Based on this background, the thesis takes the new rural financial institutions in ShaanxiProvince and Ningxia Hui Autonomous Region as the sample for research. Spot investigationis conducted to know the specific implementation of these institutions; the combination ofquestionnaire and interview is carried out to gain the opinions on and suggestions to thesupporting policies from farmers, enterprises with middle and small size, and the newinstitutions, which gives a light to the problems existing in the policy; both AHP and expertscoring method are adopted to evaluate generally the importance of policies for the new ruralfinancial institutions. Meanwhile, the experience of other countries is also analyzed andlearned for the advise to the policy for the improvement of the development and strengtheningof functions of the new rural financial institutions.Chapter one, introduction. The chapter gives an introduction to the background, purpose,importance, method and the possible innovation of this research, as well as the literaturereview concerning the supporting policy for the new rural financial institutions, both home and abroad, in recent years.Chapter two, analysis of the development situation of new rural financial institutions.The chapter analyses the current development situation of the new rural financial institutions.The chapter focuses on definition and features of the new financial institution, and analysisthe number of new rural financial institution, the distribution, deposit and loan balance of thesituation. The chapter states the situation of the new rural financial institutions and by accountagriculture-related loans, further analysis of the effect of the new rural financial institutions inrural finance.Chapter, evaluation of the supporting policies about new rural financial institutions. Thechapter three evaluates the present supporting policies for the new rural financial institutionsbased on the results obtained from the spot investigation. AHP and expert scoring method areadopted to appraise the importance of the favorable policies for the new rural financialinstitutions. The conclusions of this chapter can provide evidence to next chapter.Chapter four, questions about the policies of new rural financial institutions. The chapterbased on the conclusions from the chapter three, problems in the policy are found, such asover-high tax, inadequate subsidy, excessive deposit reserves, low interest rate andinsufficient supervision.Chapter five, comparison and borrow the experience from domestic and foreign ruralfinancial institutions. The chapter mainly offers the experience and enlightenment gainedfrom the successful policies supporting the small rural financial institutions in the developedcountries and area like USA, Japan, Germany, France and Taiwan as well as the developingcountries like Bangladesh and India.Chapter six, suggestions about improving the support policies of new rural financialinstitutions. The chapter launches suggestions to perfect the supporting policies for the newrural financial institutions, namely, lowering the standard of taxing, increasing the subsidy,reducing the rate of required reserves in the village banks, adopting the market rate of interest,improving the environment for supervision, constituting the related laws, perfecting theinsurance for the new rural financial institutions and formulating the incentive and quitmechanism for the institutions.