The Study On Problems In The Development Of Laiwu’s Rural Finance

Rural finance is an important part of China’s financial system. The development and innovation of rural finance plays a significant role in maintaining the stability of rural economy and society and implementing national policies supporting rural development.The reform of rural financial system is taking place in the development history of rural economy and society. After years of reform and development, rural credit cooperatives have thrown its historical burden away and play a role in serving agriculture, rural areas and farmers. The innovation in rural finance is very active that rural credit cooperatives have created many financial products suitable for rural areas. The infrastructure of rural finance is being improved and the payment and credit systems are being established gradually.This paper investigates the status quo of Laiwu’s rural finance. It firstly reviews the history of Laiwu’s rural financial reform to explore the reasons which derive from system and history behind those changes in rural finance. The third part of this paper analyses the status quo of Laiwu’s rural finance and points out problems in the current pattern of rural finance. Next part analyses the mainstay, trend and problems existing in Laiwu’s rural finance from demand and supply respectively. The analysis gives a clear description about flaws in Laiwu’s rural financial market and shows the direction for the next step reform.Finally, the author puts forward some pieces of advice to promote Laiwu’s financial market on the bisis of the preceding analysis.The conclusion of this paper is as follows. First, China’s rural financial reform is generally top-down reformation dominated by the government. However, with rural economy developing and the power of rural financial market strengthening, the market demand rather than government policies should be the main driver for rural financial reform. Second, there are many problems existing in Laiwu’ rural financial market, such as short financial supply, capital outflow, market segmentation and financial monopoly,etc. In order to solve those problems, it is significant to build the system of law and credit, allow more financial institutions to enter the rural financial market,comprehensively promote the reform of rural credit cooperatives and encourage financialinnovation. Third, rural informal finance is endogenous because it is induced by the development of rural economy and scarce of formal financial supply. The government should reasonably guide the development of informal finance and include it into its supervision so that it can serve the economic and social development in rural places better.