Research On The Risk Of New Rural Financial Institution In Our Country

Rural financial innovation is the inevitable requirement of the development of rural economy in China. Since 2004, the first file made by has put forward to encourage institutional innovation in rural financial system for three consecutive years. In 2006, the first file explicitly proposed to encourage the establishment of diversified ownership community financial institutions in county. On December 20th, 2006, the China banking regulatory commission (CBRC) issued a file named《Some Opinions made by the China Banking Regulatory Commission on Adjusting and Loosening access of Rural Banking Financial Institutions to support the Construction of New Socialist Countryside》,which loosed the access of rural banking financial institutions to rural areas. Then, the new type of rural financial institutions which meet living and production needs of farmers appeared with the expectation of farmers and support of policy. From March 2007 the first town bank around -- Yilong Huimin village Banks in Sichuan to the end of 2009, the quantity of new type of rural financial institutions has reached 172, including 148 town banks, 8 loan banks and 16 rural mutual cooperatives. By the end of 2009, the 172 new rural financial institutions, has absorbed capital totaling 70 billion RMB, deposits 269 billion RMB. And the loan balances has already amounted to 181 billion RMB, which included 5.1 million farmers loans, loan balances 65.5 million RMB, small business loans 50 million households, loan balances 91 million RMB. And the two kinds of loan balance respectively accounting for 36% and 50.4%.The development of the new financial institutions is helpful to solve many rural financial problems, such as the rural capital circulation channel unsmooth flow, capital outflow, rural capital needs can not being met and so on. And it has also played a positive role to promote the county economy and the development of "three agriculture". However, from the views of the operating conditions of the new type of rural financial institutions in recent years, its risks are increasing. But its managers and operators are lack of understandings on the operating and managing risks, and not to mention establishing effective risk control mechanism. In this case, it makes the operating and continuing development of the new type of rural financial institutions lie a tremendous uncertainty. Therefore, it is the key to establish a scientific and feasible new type of rural financial institutions risk evaluation index system, to prevent and dissolve the new rural financial institutions, and it also the urgent problem needs to solve. This paper makes the new type of rural financial institutions as its research object, and takes the method of theoretical analysis and practical analysis, to reach the development status, risk characters and influence factors, and then put forward a new type of rural financial institutions risk prevention countermeasures and suggestions.This paper first systematically reviewed the financial institution risk theories, which is the basis for research. And then, this paper analyzed the status of China's new rural financial institutions, from three aspects of the quality, fund size and the utility of new-type rural financial institutions. Analysis shows that the quality of China's new type of rural financial institutions has developed rapidly, the scale of funds has been expand, the utility has played a more fully effective. However, there still has been a big gap compared to the needs of rural financial services. Then, this paper made the details to the risk and Its features of new rural financial institutions. Based on the investigation and analysis of data access, and on the principles of comprehensive, accuracy, scientific, the importance and sensitivity, this paper used Analytic Hierarchy Process (ahp) and Expert Scoring Method, classify and sort the risk factors which the new financial institutions faced, build new financial institutions risk rating index system. The analysis shows that the internal factors of new type of rural financial institutions are the most influential factors to the risk of new type of rural financial institutions among the first level index, and the weight is 0.667. And among the second level index the development capacity is in the first place, and its comprehensive weight is 0.2548. In addition, the influence degree of government departments, financial institutions, security, liquidity, regulatory, capital adequacy, profitability, economic and environmental factors to the risk of new type of rural financial institutions should not be ignored. Then, this paper presented the model of foreign micro financial institutions risk management and its enlightenment to China's new rural financial institutions. Finally, combined with actual situations of new rural financial institutions and the successful experience of loans Latin American countries, this paper puts forward some countermeasures and suggestions to prevent the operating risk of the new type of rural financial institutions. Concretely speaking, the paper's main points are as follows: we should begin from internal and external affecting factors of new rural financial institutions: the new rural financial institutions improve their internal mechanisms, strengthen internal controls, enhance the management level; banking regulators strength supervision of resources and improve regulatory standards; in appropriate cases the government intervention enhance its functions and increasing support.