Study On Financial Risk Early Warning System Of Rural Credit Cooperatives

Rural credit cooperatives(RCCs)are very important financial institutions in rural area.RCCs have been charged with supporting rural economic development. Now RCCs are the most major force of rural finance, other financial institutions cannot compare with their market share and so many business agents. This monopolic mode of operating supported RCCs to improve their profitability, but there is enormous financial risk hidden in it.RCCs had complex developing process, went through many institutional reform. This experience result that it is not very clear about RCCs' property right and carry on very heavy burden. They run with a great deal of non-performing assets when they broke away with Agricultural Bank of China in 1996.The rural area is very special as a kind of operating environment. A series of problem such as seasonality of rural production and the weak credibility consciousness of farmer and managers of township enterprise ,which threaten the RCCs' financial security seriously. These years, the Party Central Committee have paying attention to the issues of agriculture ,farmer and rural area, the running of national economy is affected by rural economic development. So RCCs,the rural financial institution, which are burden the risk that supporting the development of rural economy are paying attention by people again. How about the operating running of RCCs? Is there financial risk about RCCs ? What are the resources of financial risk and how to keep away the risk? They are all what we should pay attention to and solve.This thesis will start from researching the financial risk of RCCs,to know about RCCs financial situation and sort the financial risk into five categories, to analyze what are causes of financial risk and on this basis, to discuss how to solve RCCs' financial risk. The key to solve financial risk is early warning .First, evaluating the financial situation according to current or historical data, then dope out the degree of financial risk in future and give pertinent countermeasure.So,this thesis is designed to build a perfect financial risk early warning system of RCCs,which is to collect financial information, deal with information, raise the alarm and give countermeasure. The core of the early warning system is to build the financial early warning index system. This thesis will classify the RCCs' financial risk and weighting every index by Analytical Hierarchy Process, then form a whole financial risk early warning index system. At last ,we will collect the financial information of W RCC from 2007 to 2010 as an example to analyze, as to show the action routine of the financial risk early warning system of RCCs.