Research On China Rural Finance Service Development In The Urbanization Process

The rural financial services development lag has been an important factor in developing China’s rural economy, upgrading agricultural industrialization level and enriching farmers. Academia had undertaken extensive research on rural financial theory, government has never stopped on the reform of rural finance, but the contradiction between the development of rural financial services lag and rural economic development has not been solved radically. One of the important reasons this paper believes is the relationship between rural financial services and rural economic development had not studied in a dynamic perspective from the urbanization process. Based on this, it tries to analyze the causes of the imbalance between supply and demand in rural financial services, and to reveal the inherent law of China’s rural financial development in a dynamic perspective, then the corresponding strategy and specific measures will be put forward in consonance with China’s urbanization process which is different from non-urbanization and urbanization of rural financial services development.Under the guidance of the economic growth theory, modern financial development theory, dual economic structure theory and rural finance development theory, the existing problems of China’s rural financial services development is analyzed by learning from international experience of the developed and developing countries’rural financial development. The study found that the pattern of urban-rural dual economic structure in China has not changed, the traditional model of economic growth in rural areas cannot adapt to the market economic development, and a series of the problems still exist in rural financial repression, asymmetric information and lack of financial effective supply seriously. In recent years, China has stepped up efforts to reform the rural finance, but the lagging situation of rural financial services still has not reversed. Although reforming joint-stock of rural credit cooperatives and the Agricultural Bank, encouraging establishment of rural banks, cooperative banks, small loan companies, and the situation of the main competition in the variety of business development still has not been formed.In the development of rural financial services, urbanization becomes an important factor to be considered. It is the inevitable process of modernization of any country. China has entered the middle of the urbanization, the rate ranges from10%of the initial development during the founding of New China to50%today. The situation of our agriculture, rural areas and farmers undergone tremendous changes accordingly, but the development of rural financial services did not able to keep up with the pace of the "three rural". Based on the perspective of urbanization, from the financial services function, the expenditure required to industry and the supply of the main three aspects, the demand and supply situation of China’s rural financial services are analyzed. Using the Analytic Hierarchy Process (AHP) to build a satisfaction and support evaluation system, China’s supply gap of financial services in rural areas can be found. The study found that the mainly causes of the huge supply gap of the rural finance in China is that the low enthusiasm in formal financial, the legal restrictions in non-formal financial and serious loss of capital in rural capital. Then the dissertation analyzed the game behavior between financial institutions and farmers based on the game theory, which found that the game equilibrium is difficult to achieve a win-win situation when farmers have not enough property mortgages. Through introducing the third party-government, the dissertation established a tripartite game model. That can satisfy famers’credit fund demand by government’intervention for the behavior of farmers and financial institutions.Therefore, on the basis of a SWOT analysis on the development of rural financial services, short-term goals to improve the rural financial service system and the long-term strategic to close income gap in rural financial development is put forward. Meanwhile, specific measures for implementation of the strategic objectives are come up with to build a competitive market structure, expand rural financial sources of funds and improve the rural financial services environment. Eventually, it establishes a rural financial service system matching with the urbanization process in China to solve the rural financial services development lag situation basically and to realize agricultural modernization, rural economic prosperity and farmers’prosperous lives.