Research On The Impact Of Local Commercial Banks To The Development Of County Economy

County economy is an important part and the foundation of China’s national economy development. The development of the county economy determines the sustainability and stability of China’s economic development. China’s county economy has two characteristics. First, the small and medium-sized enterprises account for a relatively high proportion. Second, rural economy is an important part. Thus the two areas of financial demand is an important demand in the county economy. There exists some financing difficulties for the small and medium-sized enterprises because of their own disadvantages. The funds demand of farmers also cannot be met through the traditional banking system. So only relying on the traditional large banks and joint-stock banks is difficult to meet the funding demand of the county economy.As an important part of China’s banking system, establishing and operating in the local banking financial institutions, the main business of local commercial bank is to serve the local small and medium-sized enterprises, local residents and local rural economy. In our county local commercial bank includes city commercial bank, rural credit cooperatives, rural commercial banks and rural banks and other. Compared with traditional big banks, local commercial banks have their own unique advantages in solving the financing difficulties of small and medium enterprises and farmers’ funding demand. Local commercial banks have a unique advantage in the field of information acquisition, project seeking and risk control, which is based on the local government and local economy or the local residents. At the same time, thanks to the establishment on the local, general decision chain is short and approval is flexible. Besides, it can serve the funding demand of the small and medium-sized enterprises and farmers effectively since it supplies financial products and services according to the local characteristics of the industrial structure and characteristics of the industry development. However, sometimes local commercial banks have problems in providing funds and financial services due to close relationships with the government, unclear position, low level management and shortage of the talents, which makes it not conducive to the development of the county economy.This paper discusses and analyzes how to solve the two aspects of the financial needs of the county economy for the local commercial banks. This paper expounds the advantages and disadvantages of local commercial banks in solving the county financial demand. At the same time, the panel data of 90 counties in Shandong province from 2005-2013 were selected to measure the regression. On the basis of it, we analyze the specific role of local commercial banks in the county economy of Shandong province. And according to the empirical results, it is found that the local commercial banks in Shandong province did not show the advantage of promoting economic growth. Therefore, if local commercial banks want to effectively boost the county economy, it is necessary to overcome some of the drawbacks of their own. Finally, at the last part of the paper, some related suggestions are given.