Research On Agricultural Policy Finance Supporting The Development Of Agricultural Economy

The past few years have witnessed the steady growth in agricultural economy in China, along with the three rural issues becoming the focus of social concerns and the agriculture-related development problems gaining increasing attention. The essential financial support has played an indispensable role in the development of the agricultural economy. The financial support provided by the society for the purpose of agricultural economy development can be categorized into three sources, namely policy finance, commercial finance and nongovernmental finance. Commercial investors have the tendency to withdraw capital in recent years due to their maximum-benefits-seeking nature and their reluctance to be involved with high-risk, low-yielding, and long-return financial products in agricultural economy. Owing to its simple procedures, private finance is prevalent among farmers and such a kind of financing does bring them a certain amount of capital support. However, it cannot be denied that the negative effects in accompany with the high interest rates and high risks would eventually lead to the poverty of the borrower and also the instability and insecurity of the financial environment; thus, the further development of the private finance is restricted by the government. Instead, as the major macro-control means to implement national policies, policy finance supports the development of agricultural economy and has gradually evolved into the optimal funding source for agriculture development.The inefficiency, externality and high risk of the agricultural financial markets give rise to the agricultural policy finance. Since it came into existence, the agricultural policy finance has been serving for multiple ends such as the development of the agricultural economy, the optimization of resource allocation and the attraction of commercial funding; and it has also succeeded in providing national support for the development of the agricultural economy by utilizing tools like policy agricultural guarantee, institutional loans and interest subsidies. With the support of agricultural policy finance, the agricultural economy in China undergoes constant development, and such a great progress would have not been achieved without the contributions made by Shandong Province. As a major agricultural province, Shandong Province has led the agrarian reform and played an exemplary role in promoting the growth of agricultural economy. The agricultural policy finance mainly takes effect through the efforts of the Agricultural Development Bank of China. Therefore, in the empirical section of this paper, the agricultural policy financial institution is represented by Agricultural Development Bank of China Shandong branch; and multi factor linear regression model is adopted for the analysis of the supportive effects exerted upon the development of agricultural economy by agricultural policy finance in Shandong Province. The supporting role of the policy finance is verified, nevertheless the results also demonstrate several existing problems, including the weakness of the role played by agricultural policy finance in Shandong, the inadequate support for the development of agricultural mechanization, as well as the lack of immediateness in achievement presentation. On the basis of the above findings, the researcher offers several proposals to improve the structure of agriculture supporting within the framework of the agricultural policy finance, to strengthen the leverage of capital, to expand financing channels and to perfect the national law system, for the aim that the support provided by the agricultural policy finance upon the development of agricultural economy will be enhanced.