Research On The Mechanism Of Formation And Function About The Social Network Capital In Village Banks

As a new type of financial institutions in China, Village Banks is an important measure in the context of the new era that break the dual problem, support the building of new socialist countryside, increase the supply of rural finance, fill gaps and introduce competition to solve the existing financial services in rural areas, There were more than 100 village banks, as of June 2009. However, the special conditions in China, Village Banks must face the grim situation which the worse financial environment in the rural market, credit information system lag, deposit organization, loans marketing cost of the work and transaction increased relative, and so on. Village Banks are small-scale and its credit recipients different other commercial banks, it is impossible to establish with other commercial banks the same decision-making and management mechanisms. Village Bank's decision to rely more on "soft information", and "soft information" access channel is mainly based on trust-based social network circle. That is each village bank managers and theorists must consider a major issue. How to survive and development in the inferior, how to use favor of face perception and relationships network over the years was to reduce transaction costs in rural China and how to avoid the fierce competition in the short advantage invincible position.The purpose of this thesis was to explore the economic factors of a social network capital in village banks, to be integrated the social network capital theory into the development framework of village banks, to analyze the formation and action mechanism of social network capital in village banks with relevant economic theory. Clarify its impact on the operation of village banks, to maintain sustained and steady development in the Village Bank's particular historical period and stage of development.Firstly, in this paper, we made systematic comparison that to some extent been effective in addressing the rural financial market in general challenges faced by the unique credit system management model-Grameen Bank, Bolivia Sun Bank, the Indonesian Ministry of People's Village Bank. Study found that social network capital is the key to success of their credit operations in rural areas. Village Banks in our country need to learn from experience of rural non-formal finance and foreign rural bank. We must make full use of social networks in rural areas, to overcome credit market information asymmetry problem, and to develop, accumulate and use of this relationship resources by the network. We must turn relationship resources into its development of the capital.Secondly, this thesis researched on the formation mechanism of the social network capital in Village Banks. Different forms of social network capital formation mechanism is different, people participate in some social network may be out of direct economic purpose, but some networks may be involved in order to participate in the activity itself. Individual level social capital network is mainly cognitive social capital. Its formation is always and trust. Therefore, the social network capital at the individual level in Village Banks is based on the formation of trust and interaction. The social network capital at the organizational level in Village Banks complete networks capitalized that individual network must be transformed into the team and organizational level network, that is the social network capital in Village Banks. Between the Village Banks and other organizations, whether to establish a trust, and the formation of its network of capital, depending on the interaction of various interest groups at various levels to achieve the stability of the evolutionary game equilibrium.Thirdly, this thesis researched on the action mechanism of the social network capital in Village Banks. The key features of the social network capital in the development of Village Banks is that it can solve the lack of rural financial markets and market failures, thereby increasing the efficiency of Village Banks operating. This is the application of this innovation, it can be used to understand and guide the development of the early practice of Chinese Village Banks. The individual level of social network capital at Village Banks is mainly spread through the promotion of individual tacit knowledge, amend the personal preferences of individual acts of co-ordination and curb moral hazard to play economic role. The Village Bank's level of social network capital is to play an economic role through the promotion of the integration of tacit knowledge organization, to organize informal sanctions to ensure the implementation of the contract to facilitate information dissemination and sharing between organizations. The information flow of the social network in Village Banks improve the operating performance of Village Banks by the improvement three factors:the physical capital, human capital accumulation and movement of factors of production, exchange efficiency and innovation activities. Thesis expounded Barr model to improve business performance of the social network in Village Banks.Finally, this thesis made an empirical analysis of the role of social network capital in the development of village banks, through a combination of depth interviews and questionnaires, that basis on the actual survey data about the role of social network capital in the village bank. This thesis confirmed by the reality of the two cases that social network capital for the development of an active role in village banks.The basic conclusion of this thesis are:(1)the rural financial in China needs micro-financial institutions such as Village Banks, but its credit environment and the special nature require innovative financial services and financial management practices to reduce their operating costs, promote its sustainable development. The social network capital theory is especially explained the developed theoretical and practical problems for the economic development of rural areas. (2)The social network capital at the individual level in Village Banks is based on the formation of trust and interaction. Its organizational level of the social network capital formation depends on the interaction between various stakeholders in multi-level evolutionary game theory to the stability of the equilibrium state.(3)The social network can play an important role of asymmetric information under the information is not sufficient and "hard information" shortage in rural financial market.(4)The manager of Village Banks benefit through the social network of information, increasing chances for successful cooperation, to improve their development capability, thus enhancing the performance of village banks. Therefore, there is a significant effect the social network capital in Village Banks to improve their business performance.