Research On The Village Bank’s Development On The Perspective Of Relationship Credit

"Three agricultural problems have been the focus of our government, and ruralfinance is an important part of it. Rural finance is the center of modern rural economy. It isalso the weakness of the entire financial due to various reasons. Insufficient financialsupply, imperfect system and the lag of rural financial development have seriously affectedthe sustainable development of Chinese economy.Learning from the experience of American community bank successfully serving thecommunity, China established the village bank. The village bank is one kind of middle andsmall banks, whose market position is to service the rural and farmers’ bank. It supportsrural economic development, and fulfills the task of agriculture. The village bank is animportant innovation of Chinese rural financial system. Now the village bank developsrapidly, but as its development there are more and more problems exposed. Many villagebanks emerge from its market position. Although learning from American community bank,the development situation of village banks has a big difference from community banks.There are many reasons causing that village bank is not as successful as communitybank based on the perspective of relationship credit. This paper firstly performed literaturereview, and then discussed the relevant theories about the financial intermediation andrelationship credit. Furthermore, the development and current situation of village bank wasdescribed, then Shouguang village bank and Qilu village bank were made as examples tostudy the development and the reasons for the insufficient development of relationshipcredit in village bank; the development and current situation of community bank wasdescribed. It compared village bank and community bank and learned from the successfuldevelopment of relationship credit in community bank; finally, put forward policyrecommendations from two levels of government and village bank to improve relationshipcredit in village bank based on problems of the relationship credit in village bank andreference to the American community bank.