Development Of Rural Funds Union Issues

As a big country especially in the field of agriculture, China’s economy relies onthe development of rural areas to a great extent. The current situation of our country’srural financial market is focused on the problems such as insufficient supply andstructure imbalance, which have plagued the economy development of these areas.According to relevant international experience, only the development of ruralcooperative finance organization can help to solve the problem effectively. As a newform of rural financial cooperative organization, the rural mutual-fund cooperativessuccessfully overcome the common difficulties such as information asymmetry andmoral hazard in rural financial system. It has many advantages such as being able toprovide sufficient funds and can operate with a very low cost. However, the ruralmutual-fund cooperatives have developed slowly due to a lack of support from thegovernment.In the first part, the thesis introduced relevant theories of cooperative financeand the experience of developed countries such as Japan and Germany. It points outthat on the basis of absorbing relevant experience from other countries, we must takeinto consideration of factors such as the average area of farm land for each person andthe situation of commercial credit for each country.In the second part it introduces the main traits of China’s rural mutual-fundcooperatives and analyzes the special point of the system, which include the fragilityof China’s rural financial market and the obstacles of the Urban-Rural Dual System.By analyzing the demand-supply structure, we come to the conclusion that there is ahuge fund demand waiting to be released in China’s rural area, so it’s necessary todevelop rural financial organization such as mutual-fund cooperatives.In the third part, it comes to the current situation of China’s rural mutual-fundcooperatives. With the case study of four typical types of rural financial organization, it reveals the fundamental cause of their slow development, which include insufficientfund sources, the lack of government support and professional human resource.In the final part, we summarize the materials above and table useful suggestionsfor policy makers with the synthesis of relevant experience from other countries. Themeasures we strongly recommend are listed as follows: lowering the entrancestandards for the establishment of such rural financial organizations, extending thereach of fund resources, cultivating professional personnel and strengthen the marketregulation.With such analysis surrounding China’s rural finance, we hope to provide adeep anatomy into the solution of many a current problems and be as a reference forother researchers as well.