Study On Characteristics And Control Of Rural Credit Risk In Metro-Area Suburbs

Financial institutions are unevenly distributed across China as a result of unbalanced urban and rural economic growth. On the one hand, there is cutthroat competition among urban financial institutions. On the other hand, farmers can hardly receive access to loans, which has been a problem for long. This is because financial institutions usually face high credit risks while providing loans to farmers, due to natural attribute of the agricultural economy, mobility of farmer assets, and outdated rural credit system. With economic restructuring and urbanization speeding up in China, boosting rural economic development has become a top priority for China as its economic rebalancing is underway. The metro-area suburbs, which connect big cities with rural areas, serve as a catalyst to both urban and rural economic growth.However, due to the lack of an effective method to control rural credit risks, in addition to inherent risks of economic growth in metro-area suburbs, financial institutions can hardly flex their muscles in supporting rural economic growth. The metro-area suburbs, which connect big cities with rural areas, feature a combination of characteristics of both urban and rural economies and are less developed than big cities and more developed than rural areas. As thus, metro-area suburbs are different from rural areas in terms of risk features and risk control.This essay starts with a wrap-up of findings by Chinese and foreign researchers in bank and rural credit risk control. It goes on to discuss the current economic growth and characteristics of credit loan system of metro-area suburbs, and then provides insights into problems in rural credit risk management. The problems include lack of independent risk management, vulnerable credit rating system, absence of all-inclusive comprehension and understanding of internal control for credit management, unscientific internal organizational structure, lack of mutual dependence among all business divisions, and lack of effective and independent internal control. Together, these problems result in weak management of rural credit risk. Providing an in-depth analysis of current rural credit risk management in Longquanyi District of Chengdu, the essay suggests that rural credit risk management should be market, security and profit-oriented, should follow the regulations of legal monitoring, appropriate competition, and rational coordination, so that a firewall can be established to truly protect financial institutions and to make sure they provide financial aid for rural economic growth.