Research On The Internal Governance Structure Of Chinese Rural Mutual Financial Cooperative

Rural mutual f inancial cooperative rising with the development of Chinese agriculture is a new type of financial inst itution, which could meet capital demand requirement of peasant households characterized by small amount, frequency, diversification and urgency. Present conditions that demand and supply of agricultural capital is in disequilibrium have been changed and the financial cooperatives play a signif icant role in agr icultural production and lives funds. As the internal governance structure of rural mutual financial cooperative is disordered and the funds microcirculation between countryside and farmers is impaired, China Banking Regulatory Comm ission(CBRC) has suspended approval of rural mutual financial cooperative since 2012. At the same time, for the relative lack of using the relevant principles of the New Institutional Economics to study on internal governance structure of rural mutual financial cooperative, so the article studies on internal governance of rural mutual financial cooperative in the angle of residual control rights and residual claim rights. Then the article puts forward corresponding countermeasure proposals to enhance its risk defender capability and maintain steady, healthy development.The development progress of rural mutual financial cooperative is analyzed first in this paper and the factors promoting the development of Chinese rural financial cooperative has been expounded in terms of supply and demand of finance and feasibility study, from which the research draw conclusions that the main characteristics of Chinese rural mutual f inancial cooperative development are as follows: sheer quantity, scale expansion and divers ifying model, meanwhile, there are many problems in the development progress of rural mutual financial cooperative among which the irregular internal management structure is partic ularly pressing.On the basis of cooperative finance theory, the article point out that the internal governance principle of rural mutual financial cooperative is voluntariness, mutual-aid and cooperative, non-profile, democracy and equality. With the application of contract theory of new institutional economics and benefitt ing from the experience of fairly mature internal governance structure such as Baixin, the study analyzes normal governance structure of mutual financial cooperative, inc luding institut ional framework based on principal-agent relat ionship, stock ownership based on property relations, credit mechanism based on control power and revenue allocat ion mechanism based on residual claim r ights,the evaluat ion index system of internal governance structure performance has been constructed with a view to operation management performance and social performance based on above analyses.Using questionnaires, the paper’s empirical analysis studies two cases, Henan Puyang Yinrong financial cooperative and Zhejiang Ruian Huim in financial cooperative as the representation of informal and formal mutual financial cooperative respectively, and then a comparison study on the similar ities and differences of internal governance structure of two types of mutual financial cooperative is considered with a view to institutional framework, stock ownership, credit mechanism and revenue allocation mechanism. From the foregoing analysis the paper concludes the differences between internal and normal governance structure in practical operation, including enlarged residual control rights, fictitious social rights, humanistic credit business and rewards distributed unequally. With the support of internal governance performance evaluat ion system, the study analyzes contrastively internal governance performance of two kinds of financial cooperative on view of operation management performance and social performance to contribute to the comprehensive analysis of internal governance structure.The article concludes the governance model and experiences of Asia cooperative finance, on the basis of complete analysis, the main conclusions are residual control rights gradually imbalance, residual claim unreasonable allocation and different types of rural mutual financial cooperative have focused on the different performance level. The study puts forward some practical proposals in order to improve Chinese rural mutual financial cooperative in four aspects: improving capital management mechanism,optimizing institutional framework, improving regulatory system and establishing training system.