A Study On Rural Credit Risk Prevention Research

In recent years, China has been actively promoted the rural financial reform. Banks such as Agricultural Bank of China(ABC), Agricultural Development Bank(ADB), China Development Bank(CDB) are slowly changing their modes of management to reposition in the rural market. With the reforms, the competition in rural finance market is becoming more intense than before. Since the rural credit cooperative(RCC)has its own special experience historically, it is suffering more risk and more pressure than other regular financial institutions. Therefore, the biggest question faced by rural credit cooperatives is how to improve efficiency and to averse risk in the fierce market competition. In this paper, we studied the RCCs of Jingyan in Leshan. By analyzing their risk situation, we made recommendations for them, hoping to improve their risk aversion level and to concrete the foundation for future development.In this study, we first analyze the financial risk aversion measures introduced from domestic and abroad developed areas to inspire the ideas of the development of rural credit cooperatives in Jingyan. Then we studied the status of RCCs of Jingyan on theory level:we investigated its ratio of capital adequacy, ratio of deposits and loans, etc. These data analysis show that although in recent years RCCs of Jingyan have been made great progress, there are still risk aversion problems exsiting in four major areas:system risk, operational risk, credit risk and the credit environment risk. The internal risks include system and operational risks, mainly in the unfair equity allocation, promotable internal management level; unreinforced system implementation; credit system problems; ambiguous loan classification and re-examination; ambiguous agricultural loans classifications. External risks include credit risk and credit environment risk, mainly in the missing mind of farmers and township enterprises in credit; agriculture’s relative weakness on risk aversion; unperfected rural social security system; risks from the government-leading policy services. Finally, based on these four aspects we give appropriate policy recommendations trying to build the safeguards for Jingyan’s RCCs risk aversion system.This article presents a detailed design for the establishment of a relatively complete risk aversion programs and a scientific management system of RCCs in Jingyan. Hence, this study also has a consult value for other RCCs with similar situation.