Study Of Chinese Rural Financial Supply Problems

This dissertation focuses on issues related to China's rural financial supply. Based on the consensus that financial development is one of the driving forces of economic growth, we examine if it applies to the growth of the rural economy in a transiting China. This paper devotes major efforts to studying the relationship between China's rural financial development and rural residents' per capita income, and the relationship between the rural financial development and the income gap. The role of rural financial system is also investigated in the formation and development of 'Three Rural Problems'. In addition, the paper also explains the function variation and repression of China's rural finance and hence provides some suggestions on what and how to build a new-type rural financial supply system in China.The research consists of three parts including seven chapters. Part One (that is Chapter One and Chapter Two), which is literature survey, forms the theoretical foundation of the study. In Part Two (including Chapter Three, Chapter Four and Chapter Five), we adopt the econometric method and uses the time series dataset to examine the empirical relationship between rural financial development and the income of peasants, and then give some reasons for the function variation and supply repression of the rural finance. In Part Three (including Chapter Six and Chapter Seven), we put forward the connotation of a multi-level multi-agents rural financial system according to the experiences of foreign countries, and make some suggestions on how to correct the rural financial system function deviation and eliminate the repression on China's rural financial supply.The major conclusions of the dissertation are as follows:I. The existing rural financial supply system is an important factor leading to the poverty of the rural peasants since China's reform and openness. Under the old rural financial system, it becomes more difficult to increase the income of peasants as the finance develops. Allowing for the strong path-dependent characteristics of the old rural financial system, it is necessary to re-build a new-type rural financial system to resolve the 'Three Rural Problems' and to avoid the "Latin American Trap".II. The function variation and supply repression of China's rural finance result not only from the inherent high risk that lies in the agriculture development but also from inappropriate government intervention. The excessive government intervention and control is path dependent and eventually lock China's rural financial system in disorder.III. According to international practices, an efficient and sustainable rural financial system must be diversified, market-oriented, integrated and democratic. It is a universal law and consistent with the inherent high risk of rural economy. The government intervention may be effective in short term, but in the long rung it will be invalid, say Brazil and India, since the intervention will undermine the market mechanism and the rent-seeking power will lead to policy failure.IV. It proved that the efforts trying to resume the function of China's rural financial system in the old framework were ineffective. China's new rural financial system must sever the link with the past. It should refer to the experience of Japan and Bangladesh to create a new effective rural financial system, which will have some characteristics both of the American model and the Grameen Bank's GSP Financial System. The stereotypes of state-control needs to be abandoned and replaced by a new thought of comprehensive finance. China needs to mobilize the enthusiasm of farmers and private capital, and switch the idea of government-control to government-guidance, of strict control to effective supervision, of being a monopolistic market to building a competitive market. The market mechanism should play a fundamental role of in the construction of a new rural financial system.