Research On The Credit Operating Mechanism Of New-Type Rural Financial Organizations

Providing financial services for farmers and SMEs is an important topic to be resolved in China’s rural economic development, and also the important challenge faced by our government. Institutional arrangements of formal financial institutions are difficult to adapt to the small, decentralized financing needs from household economy mainly in the large state-owned banks and lack the positive rural services; rural credit cooperatives are weak and unable to meet the growing demand for funds due to the rapid rural economic growth. To some extent, financial institutions born in rural private sector fill the blank of the formal financial institutions, but they can not achieve their own normative development. In this context, the emergence of new-type rural financial organizations, which adapt to the credit-demand characteristics of farmers and rural small and medium enterprises, provides a new way of thinking and a new choice to become China’s rural financial development for solving this problem. Moreover, it fundamentally changes the original idea of the reform of rural financial system stock and has become an important carrier of the Chinese government in the field of rural finance incremental reform. At present, the "soup effect" of new rural financial organizations has been noticed, and has become an indispensable part of the rural financial system. However, we should clearly recognize that the development of China’s new rural financial organizations is still at the exploratory stage. There are still many problems during the credit operation mechanism of Chinese new rural financial organizations. Therefore, optimizing the operating mechanism of new rural financial organizations, and fully enhancing the credit operating efficiency of new rural financial organizations are the best choices to solve the contradiction between supply and demand of the rural financial market.In view of this, the normative analysis is used in this paper. Starting from the definition and the operation mechanism of the new-type rural financial organizations, this paper builds the overall frame of the new-type rural financial organizations credit operating mechanism. This article is discussed from several aspects:the new rural financial organizations as the credit supply party, the rural economy body as the credit demand party, the government as a regulator of new rural financial organizations. This article rebuilds the credit operating mechanism of new rural financial organizations, and put forwards several suggestions which can improve the credit operating mechanism of new rural financial organizations.Firstly, the vast potential rural financial needs are the foundation of the credit operating mechanism in new rural financial organizations. This article combined quantitative and qualitative methods to analyze the overall condition of the rural financial needs, hierarchical characteristics and the financial behavior characteristics. The measurement estimated that China’s rural financial need is huge, but its supply is inadequate, which leads the tendency of credit funding gap increasing year by year. When existing formal financial institutions cannot meet the financial needs from the countryside, it will inevitably lead to the induced institutional changes in the rural financial system, and then the emergence of new-type rural financial organizations is an inevitable result. For the different main parts in the rural financial system, the demands for credit are different, due to the big differences of farmer and rural enterprise’s financial activity and production scale, which leads that the requirements to the financial services and the extent of the satisfaction of the demand to the loans have different characteristics. However, because of the financial behavior features, the farmers and the SME are difficult to get loans from the traditional regular financial institutions. Therefore, the constitutive property of the rural financial needs provides vast market space for achievements of the new-type rural financial organizations and differentiation developments of the traditional regular financial institutions, and makes the design of the new-type rural financial organizations more correspond with the financial characteristics of the farmers and the SMEs in the countryside.Secondly, the analysis to the problems existing in the present mechanism and the evaluation to the credit performance efficiency is the basis for the credit operational mechanism design of the new rural financial organizations. This paper discusses the background of the Chinese new-type rural financial organizations, the stage of development, and the characteristics of credit operation with static and dynamic analysis method; it summarizes the main problems in the credit operation mechanism of the new rural financial organizations. In the case of the uncertain production function, DEA model can be used to evaluate the operating efficiency of new financial organizations in rural areas. From the comprehensive consideration premise, the new-type rural financial organizations features and the data collection, the paper chooses some indicators of input and output samples, and make some empirical analysis of the country banks, putting forward several countermeasures, which is the innovative point of this paper.Thirdly, this paper designs the overall framework of the credit operating mechanism of the new rural financial organizations. On the basis of the international successful credit operation mode and the operation mechanism experience, it analysis deeply and designs the credit availability affected by rural-need bodies, effectiveness and repayment of the collateral alternative mechanism for the loan pricing mechanism, repayment incentive, which is another innovation in this paper. Through the design of credit operating mechanism of new-type rural financial organizations, it effectively established a bridge which connects the supply and demand of rural finance, improved efficiency of credit funds, and achieved the positive interaction of credit funds between supply and demand bodies.Lastly, this paper puts forward relevant recommendations to the credit operational mechanisms effective operation of the new rural financial organizations. China’s new rural financial organizations are still in the preliminary stage, and still faced many serious external environment and internal conditions constraints in the creation and development. Taking successful example by the foreign small credit, we can get the conclusion that the government support and the perfect inside control is important to the credit operating mechanism. This paper put forward some suggestions, including the government use the regulation function properly, improve related policies constantly, develop rural financial environment, and improve the organizational internal control mechanisms, which provide a good environment for the credit operational mechanisms effective operation and healthy development of the new-type rural financial organizations.To summarize, this paper has important theoretical and practical significance. Form theoretical perspective, first, it proposes the basic framework of the new-type rural financial organizations operating mechanism, enriches the theoretical connotation of the operating mechanism, provides new ideas and a best way to solve the problem for the Chinese new-type rural financial organizations. Second, it uses systematic analysis principle to examine the credit operational characteristic of new financial organizations from a functional perspective; it lays the theoretical foundation for the development and improvement credit operational effective of the new rural financial system. Third, it proposes theoretical model of the new-type rural financial organizations operating efficiency evaluation, enriching the expanding the theoretical system of efficiency evaluation. From the practical perspective, the research of the operating mechanism in the new-type rural financial organizations have great significance:first, it provides an effective way to difficult financing; second, it enhances the business activity of the new-type rural financial organizations, promoting the healthy operation and sustainable development of the new-type rural financial organizations; third, it provides a reference for the government and relevant administrative departments system construction and scientific decision-making.