Study Paths Of Community Banks

Our country’s banking structure has an apparent feature of dual structure that isunbalanced development in rural and urban areas. The outstanding performance isbanks tends to be large scale, but the small banks which serve small and microenterprises fall behind seriously. In addition to the limited institution number andservice capability, the idea to serve communities and small and micro enterprises hasnot established yet, which greatly restricts the level of financial service in rural areasand some remote towns.The important reason for the inadequate situation to serve the small and microenterprises and agriculture is the lack of community banks, whose flexible, efficientoperational mechanism and personalized financial service play an important role inpromoting the financing of the small and micro enterprises and rural areas, enhancingthe finance service level, optimizing and completing the banking market structure andfunction, and filling the absent supply structure in market. So the development ofcommunity banks has a great practical significance to promote China’s economicprogress. The State Council published a “Guidance on financial support for economicstructure adjustment, transformation and upgrading” that clearly allows private capitalto enter the financial field during the Third Plenary Session of the eighth session,which represents that the banking competition will be fierce under a full liberalizationto foreign and private capital situation.Thus, how to identify the market position ofcommunity banks is related to their own survival and development in the financialsystem reform. Therefore, this paper is aim to explore the path of community banksdevelopment in the background of the problem of small and micro enterprises’financing.In this paper, on the basis of research results at home and abroad, the basicconcepts and features of the community banks are defined and their comparativeadvantages and disadvantages are analyzed, and then I dissert the necessity of development of community banks in our special economic environment. Theconclusion is that community banks play an indispensable role in solving financingproblem, improving the barren finance phenomenon in basic level, promoting thehealthy development of private capital and the reform of agricultural financial system.The analysis of the feasibility to establish community banks in theory and practicalway is also included in the paper. I cite examples of Commercial Bank of Longjiangand CMSB to make a research of the present situation of the development ofcummunity banks in our country and the problems of setting up communitybanks.Then I find the market position of community banks with theoretical andsubstancial evidences and analasis its proper path of development. On the one hand, Iproposed the feasible mode of how to develop urban commercial banks, rural creditcooperatives, joint-stock banks into community banks from the aspect of existencequantity.On the other hand, I discuss the possibility of private capital in formattingcommunity banks from the aspect of incremental quantity. Furthermore, I alsoanalysis the different founding path of community banks according to the differenteconomical environment. Finally, based on the experience aboard and the developingthinking, some suggestions about the regulatory system, the standard companies’management structure and the arrangement of system are proposed, which includesestablishing the self-regulatory organization, perfecting the inner risk-control system,building up the ownership structure, information disclosure system, restrict andbalance mechanism, incentive mechanism, establishing a standard admittance system,deposit-insurance system, and a perfect the credit system.