Studies On System Designs Of Rural Bank

On March 1,2007, China's first rural bank was established, which showed the beginning of a new type of financial institution that serve the rural financial market. The rural bank bases on the village,its purpose is to construct a bank welcomed by farmers which help peasants, benefit farmers. It will provide more convenient, better, and more effective financial services for the farmers, for the agriculture and for the rural economy, so that the poor farmers could get rich,the weak industrial could upgrade as quickly as possible.With the help of rural bank, the rural economy will develop quickly and healthy. The establishment of the rural bank filled the gaps in the rural financial services to some extent, provided services for more farmers and SMEs, guided various types of capital to rural entrepreneur, promoted the environment of the financial. As a new type of rural financial institutions, the establishment of rural bank play an important role in the follow-up reform of financial system in rural areas and provide a useful experiences and lessons.In the same time there is a considerable problem when rural banks develop rapidly. Domestic academic research on the village bank's focus in the following aspects. First, on the system of innovation, the studies show that the fundamental factor of the plight of rural financial is the lack of competition in rural financial market. As an innovation, rural bank is conducive to fostering the competitive landscape. Second, on the market positioning, studies show that the socialist countryside construction should be the background and point out that the rural bank should follow the law of the commercial banks,also, it could not deviate from the rural development needs. Third, on the specific business, studies analysed the problems and made relevant countermeasures. Forth, on the performance evaluation of rural bank, studies pointed out that rural bank added "fresh blood" in rural areas but it could not solute the problems of the rural financial fundamentally. Academic studies abroad mainly focused on the community banks which is for commercial and village bank which is for the poor. These could be references for the studies on China's rural bank. Studies have been generally on the surface of the problem, have paid too much attention to the description of phenomena.There is still a lack of analysis of the underlying factors. Rural bank is the result of the mandatory system changes, the study should seize the fundamental issue of the system design in order to clarify the development context of the rural banks, and recognize the nature of the existing problems.In this paper, the analysis uses the theory of Industrial Organization and the improved SCP analytical framework and SSP analytical framework. The special factors of rural bank system and the problems caused by these factors are the issues that should be studied in detail. The rural bank system causes the market behaviour,the behaviour leads to the performance. The balanced scorecard method is used to test the performances and get the relevant conclusions:Although mandatory system change may save the costs of system production and system running,it also limit the institutional innovation vitality and power of the primary behavioral group (a single person or single groups of individuals). Local conditions vary, rural bank set up according to the same standards does not suit all needs.The system design for rural bank is like a greenhouse, it promoted the development of the rural bank, also limited the rural bank's development in a larger space.China's rural areas varies in eastern and western regions,so two typical rural banks is introduced to analyse with SCP analytical framework. This paper observes the different performances caused by the same system design and proposes some thinking about rural bank,hoping it could give some references for the later studies.