On The Evolution Of Financial Market In China's Rural Areas Since The Implementation Of The Reform And Opening-up Policy

By organizing the rural financial market in China after opening to the outside world , this thesis investigates the question of how to deepen and promote the reform of financial system in rural areas which goes consistent with the need of modern agriculture and the construction of new socialist country.On the basis of the background of contemporary history of China's reform and opening up, according to the evolution of the rural financial market development, with the historical phase-division approach, this thesis divides China's rural financial structure and evolutionary history into three phases since the implementation of the Reform and Opening up Policy: The first stage is from 1978 to 1996,during which new financial institutions were restored and established, and separate arrangements for the rural finance were made; The second stage is from 1996 to 2003, during which it was intended to establish a period of three-dimension rural financial system; The third stage is since 2003,rural credit cooperatives have initially come into the market economy."The theory comes from the history; the history is combined with the theory". Through commenting on China's rural financial market structure and evolution since the implementation of the reform and opening up policy, this thesis summarizes the evolution rules: First, the reform mainly involves formal financial institutions. Few corresponding policies are laid down for non-formal finance, if there are, they are restrictive. Second, the reform focuses on rural credit cooperatives mainly. The 1996, 2002, 2003, 2004 plans were introduced with the core of the reform of rural credit cooperatives in an attempt to turn them into cooperative financial institutions and the main force supporting the agriculture. Third, the reform is arranged in a "top-down" way, China's rural financial market structural evolution is compulsory and gradual over the past 20 years since the implementation of the reform and opening up policy. It is driven by external force instead of internal force; it is passive evolution instead of active evolution; it is of political needs instead of market needs.Reflecting on the reform of China's rural financial institutions after the three-stage rural financial reform, however, the following four big rural financial problems haven't been solved obviously: the first problem is the asymmetric information. Formal financial institutions in rural areas are always difficult to grasp the borrowers'information, For example, on what the farmers spend their loan? How risky is their investment? How strong is their repayment? and so on. The second problem is that the farmers have only such mortgages as fields, land estate, houses, work power, which all banks are unwilling to accept. The third problem is the characteristic of big agricultural costs and market risks. Besides, the farmers live scattering in the countryside and their loans are relatively small. Therefore, the risks and costs of these special arrangements bring rural financial institutions a lot of trouble. The fourth problem is the non-productiveness of loans. In developing countries, the farmers usually obtain an income too low to satisfy their expenditure. Thus, after three stages of the rural financial reform, the problem has not fundamentally solved that it is difficult to meet the loan requirement of the rural economy entities. The essential reason is that our government has chosen the mandatory government-led model. The external model is the renewal of the traditional supply-oriented financial system under the framework of "technical efforts"and it represents the expansion and contraction of the formal urban finance in the rural areas, separates from the rural credit basis, cutting off the horizontal relations between rural trust, rural finance and rural economy.However, the rural folk finance as another aspect of China's rural financial system, satisfies the development requirement of the market economy, private enterprise, individual economy and rural family economy. Through on-spot investigation and the institutional economics theory's analysis on the cases of rural folk finance system, This thesis believes that the existence of private finance in China is endogenous, with the advantages of flexibility, convenience, simpleness, high efficiency and the tendency of rapid development. It is necessary to legalize and explicit private finance, lower the threshold for the access to financial market, and develop various forms of folk-financial institutions, such as private micro-credit banks, cooperative banks, private banks, and to make good use of rural folk credit resources."Learning from history, we can see advantages and disadvantages". Studying the structure and evolution of China's rural financial market, reveals the reasons and rules for its historical evolution since the implementation of the reform and opening up policy, sums up the successful experience and the lessons of failure. They are of great practical significance for China's rural finance development and building of new socialist rural areas. This thesis proposes some strategic orientations and countermeasures. For the development of China's rural financial market, In order to deepen the reform of the rural financial system, the more sensible choice is: on the one hand, we must perfect the formal financial system, improve their services, especially rural financial services of rural credit cooperatives, gradually open up rural financial market; on the other hand, We should relax controls, guide reasonably, endeavor private finance its legal status, and ultimately promote its spontaneous development of standardization and formalization to achieve a "bottom-up" evolution.