Study On The Performance Evaluation Of Village Banks In Sichuan Province

In the year of 2006, the China Banking Regulatory Commission issued policy "on the adjustment to ease access to rural financial institutions with banking policies better support socialism new rural construction of several opinions", for the first time the idea of setting up village banks is put forward. Since 2007 the first village Bank in China was open in YiLong of Sichuan Province.At the end of 2013,1071 Village banks was operating in China, which were located throughout 31 provinces and covering 1083 counties (city). Village banks accounted for most of new type of rural financial institutions. As the mainstay of the reform, performance of village banks will directly affect the progress of the rural financial reform. As the first pilot provinces to set up this kind of bank, our study of performance of village bank in Sichuan province may has important guiding significance.12 representative village banks of Sichuan province were selected in the study of their performance. First of all, the literature on bank performance evaluation both at home and abroad was reviewed. Second, the development and present situation of village banks in Sichuan province were analyzed, and the problems of village banks were summed up, such as deposit-taking difficulties, high operating cost, the lack of off-balance activities and limited loan products. Then, basing on general performance evaluation system of financial institutions, this paper established a new performance evaluation system which that consider special character of village banks, and factor analysis method is used to determine the weights of different indictor. The indicators included safety, liquidity, profitability, sustainability, share and coverage in supporting of agriculture basing on the angels of the survival, development and performance of village banks. And the final index showed the performance of village banks in general.Finally, in this paper, the following conclusions were drawn:first, the village banks showed rapid development, strong profitability, good asset quality and high service efficiency in Sichuan; second, about supporting agriculture, agricultural loan accounted for the whole loan package in village banks, there main services were aimed at farmers and agricultural enterprises. Village banking had played an important role in providing finance for the farmers and agriculture. Third, performance of village banks newly established is poorer, its performance increased with after startup period.The following Suggestions were puts forward:On the one hand, Village banks should improve themselves in deposit-taking ability, collateral, off-balance activities, risk management in credit risk and liquidity risk; On the other hand, the external environment of village banks should be improved by policy tools such as fiscal policy, tax support policy and solving the difficulties of village bank settlement.