Study Of Financial Exclusion In Rural Areas

Finance is the core of modern economy. The development of rural finance plays animportant role in promoting China’s rural economic and social development. Since thefounding of the country, especially since the reform and opening, rural finance in China hasgot rapid development and established a relatively perfect rural financial system, so the roleof rural finance in promoting rural economic and social development has been furtherenhanced. But in general, the effect of rural finance in promoting China’s rural economic andsocial development is still limited, and there are still some serious problems in the ruralfinance system, such as the financial institutions in rural areas gradually moving to cities, lowproportion of farmers and rural enterprises acquiring loans, rural capital flowing to the city,low quality and quantity of rural financial products and services. The theorists define thefinancial exclusion as the low available of financial products and services. According to theEuropean Commission, financial exclusion is a process whereby people encounter difficultiesaccessing and using financial services and products in the mainstream market which meettheir needs and enable them to lead a normal social life in the society in which they belong to.Experts and scholars have done many beneficial researches for rural financial exclusionproblems. They generally believed that rural financial exclusion degree in rural areas is moreserious than urban areas, and the existence of rural financial exclusion problems is harmfulfor the rural economic growth, farmers’ income growth and farmer household welfare.In recent years, the financial exclusion, especially the rural financial exclusion, graduallydrew the experts, scholars and policy makers’ attention. They explored the rural financialexclusion problems from different perspectives, and got many useful conclusions. In general,the study of financial exclusion, especially the research on rural financial exclusion is still inthe initial stage and the literature which studies the issue of rural financial exclusionsystematically is relatively rare. Under the background of serious financial exclusionproblems in China’s rural areas, the paper researches the rural financial exclusion problems byanalyzing the degree, formation mechanism, effect and mechanism of China’s rural financialexclusion. As a result, the research has practical significance in cracking the problems offinancial exclusion in China’s rural areas, promoting the construction of inclusive financialsystem, new socialist countryside and the affluent society. On the basis of existing literature and theory, this paper combined with economics,management science, sociology and other related disciplines theory, using the empiricalanalysis, standard analysis method, questionnaire survey and field interviews, comparativeanalysis, taking Shaanxi province as an example research on problems of the rural financialexclusion. The following conclusions were reached:(1) The degree of rural financial exclusion is serious. In view of the existing literatureand theory, the paper redefines the dimension of financial exclusion from a new perspective,such as the depth of the financial services, the availability of financial services, the usage offinancial services and the affordability of financial service, and establishes the “FinancialExclusion Index”(IFE) based on distance measure. According to the built measuring methodand the index system of financial exclusion index, the paper measures the degree of the ruralfinancial exclusion at the provincial level and county level. According to the results, ruralfinancial exclusion degree at the provincial level from2006to2010has a tendency toincrease, and the degree at county level is also serious. According to the survey data of472households in Shaanxi province, the paper analyzes the degree of farmer households’ loansand savings exclusion. We can get the conclusion that62.49%of farmers suffer the loanexclusion and30.51%of farmers suffer the saving exclusion.(2) The paper analyzes and reveals the formation mechanism of rural financial exclusion.In order to analyze the formation mechanism of the rural financial exclusion, based on thedemand and supply of two dimensions, this paper analyzes the conduction path of the ruralfinancial exclusion. It indicates that rural financial exclusion is the interaction result of thesupply and demand, and is affected by the macro environment, personal characteristics,business and regulatory environment. By the analysis of the influence factors of financialexclusion from the provincial, county and farmer household level, the paper finds theinfluence factors of the rural financial exclusion. According to the research, regionaleconomic development level, agricultural, income, education level, geographical factors, havesignificant effects on the rural financial exclusion; the farm households’ financial exclusion ismainly affected by income, labor quantity, education level of the head of the household, socialtrust and mutual assistance, the degree of the trust of the financial institutions, the distancefrom the farmer household to the financial institutions.(3) The paper researches the impact of the rural financial exclusion effect quantitatively,and we can find that rural financial exclusion has a certain negative effect on rural economicgrowth, farmers’ income increasing, food security, farmers’ welfare and rural financialinstitutions. To explore the effect of rural financial exclusion, this paper makes the theoreticalanalysis at first, and selects the rural economic growth, farmers’ income increasing, food security, farmers’ welfare and rural financial institutions development which are the importantaspects of the development, stability and security for a country. We can find that ruralfinancial exclusion has a negative impact to rural economic growth, farmers’ incomeincreasing, and farmers’ welfare; to the food production of the farmers in different incomedistricts, the rural financial exclusion has different effect, and the overall impact is negative.We can also find that although rural financial exclusion of formal rural financial institutionshas a certain positive effect, it will bring a lot of adverse effects in its long-term development;and rural financial exclusion has a certain promoting effect on the informal rural finance.(4) The paper researches the cracking mechanism of the rural financial exclusion byanalyzing the cracking goal, principles, thinking and safeguards measures. Based on thereference lessons of cracking financial exclusion from America, Britain, Australia andBangladesh, the rural financial exclusion’s cracking mechanism is analyzed and discussed.We can learn that in order to crack the rural financial exclusion, we must build an inclusiverural financial system, improve the availability and usage of the rural financial products andservices and promote the rural finance’s effect in rural economic and social development.Cracking rural financial exclusion needs the formal rural financial institutions, rural informalfinance and the new type of rural financial institutions to play a further important effect,innovate financial products and services and develop microfinance. At the same time, we needto increase the farmers’ income, promote the adjustment and reconstruction of rural financialsystem and strengthen the support of cracking rural financial exclusion.