Study On Improving Rural Financial System Of Northeastern Areas

An economist has ever predicted that the problem of"the three represents"will determine the destiny of China in the 21st century. A lot of factors restrict the development of"the three represents", of which the investment of funds is undoubtedly the most crucial one. Over more than 20 years'development, rural economy has gone through the primitive period of development. But the structural adjustment of rural economy and industrialization of agricultural economy can't be simply finished by depending on the self-accumulation of farmers. Moreover, the financial funds invested into the rural areas are very limited. Therefore, we must make great efforts to develop rural finance. Northeastern areas are very important base of commodity grains of our country. The output of grains is among the highest in our country. There is a large agricultural population in these areas. All the above advantages lay a good foundation for realizing the management of agricultural industrialization. Building an advanced financial system in rural areas there has positive effects on reviving old industrial base of northeastern areas and realizing the balanced development of the whole country.Cooperative finance is playing a leading role in rural financial system existing in northeastern areas. Commercial finance and policies are also playing an important role. The system of organizational structure is very complete on the surface and has a very high coverage rate, but the truth is that the supply of formal financial organizations in rural areas can't meet the financial demand caused by the economic development of rural areas and that it is difficult for the financing of rural citizens and rural enterprises. The severe lack of funds of rural economic entities, to a great extent, has restricted the development of rural economy. The reasons include the dualistic structure of rural finance, the weak position of rural economic entities, the high risks of agricultural industry; the asymmetry of information leads to converse choices and moral risks, high costs of operations involving agriculture, immaturity of financial contracts; the singleness of financial services with strategic features , the quit of financial services with commercial features, incapacity of cooperative finance, the severe lack of agricultural insurance, the severe lack of funds in rural areas caused by postal savings'transferring most of the rural funds to other places.Erecting an advanced financial system of rural areas in northeastern areas will be beneficial for solving the above problems and completely developing the function of rural finance's supporting the development of rural economy. This paper states that the rural economy will develop healthily under the following conditions: we should emphasize the function of formal finance's supporting agriculture. In particular, we should increasingly strengthen the power of rural credit cooperatives and make them actually qualified for supporting agriculture. We should also enhance the construction of ecological environment of rural finance and solve the problems of being in debt, agricultural insurance and the construction of credit institution in rural areas. In addition, we should take advantage of the functions of civilian finance.This paper is divided into six parts:The first chapter—the preface. This chapter introduces the background of choosing the theme and the significance of studying it. Meanwhile, it introduces the corresponding basic theories of finance and the basic study achievements of internal scholars.The second chapter—current situations of rural financial system in northeastern areas.This chapter states briefly the constitution of rural financial system in northeastern areas and analyzes formal finance, and informal finance in northeastern rural areas.The third chapter—the defects of rural financial system in northeastern areas. This chapter analyzes the defects of rural financial systems from the aspects of the supply and demand of funds, and discusses the causes.The fourth chapter—the characteristics of rural financial system in foreign countries and their experience. This chapter introduces the characteristics of rural financial system in developed and developing countries respectively, and discusses how to learn from the advanced experience of rural financial system in foreign countries.The fifth chapter—the suggestions on improving rural financial system in northeastern areas. This chapter puts forward the corresponding policy suggestions, that is, to enhance the existing financial system of rural areas, strengthen the ecological construction of rural finance and develop informal financial system of rural areas.The sixth chapter—the conclusion. This chapter makes a summary about the whole paper.