Thoughts On Rural Financial System In China

With 30 years of reforming and opening to oversea countries, the rural Economic structure and rural financial system underwent significant change. Correspondently, rural financial system was reformed many times. Before, to fit in with the planned economic system which is greatly collective, china had a heavily unique financial system, which government controls the financial resource directly. The only bank in china is the people bank of china which is not only a administrative organization but also a financial organization. During the period, it is Agricultural Bank of china and rural credit cooperatives that offer financial service to agriculture. However, Agricultural Bank of china has a hard development with being established and abandoned several times. The same is true of rural credit cooperatives which lost its independency and had a twisted cooperative. After reforming and opening, Chinese rural financial system experienced two phases of reform:in the first phase, the aim is to satisfy the rural financial needs (1979—1995). Reform in this period includes recovering the function of Agricultural Bank of china and carrying out reform, reforming rural credit cooperatives to free the control of private credit and establishing Agricultural Development Bank. In addition, other non-bank financial Institution, also got recovery and development. At the same time, a multi-rural financial system was formed with Agricultural Bank of china as leader, rural credit cooperatives as basis as well as other financial institutes and financing techniques co-existing. In the second period, the reform aims at improving the working efficiency of financial system (1996-2009) and the specific measures in clued speeding up commercialization of Rural Bank, strengthening the reforming of Rural Credit Cooperatives, adjusting the business scales of Agriculture development bank, regularing its price financial activity and encouraging the development of middle and large financial organization.However, these reform haven't really resolved the condition between rural financial service and rural economical development.At present,issues concerning agriculture, countryside and farmers are still the focus issues that Chinese government are trying to deal with.There are lots of factors leading to the issues,among which the most important is that the current rural financial system can't fit the financing requirement of the economic subject, which in turn produce bad influence on the development of rural economy and prevent hinder the farmers earning widening the gap between rural area and urban area. Therefore, reform of rural financial system has already become focus of rural reform and theoretical research.This paper firstly describes the present domestic and abroad research on rural financial system. Many scholars insist that the current situation of the rural financial system in china limits the development of rural credit so seriously that serious financial repression happens. The lack of rural financial offer is due to disadvantage of rural financial system, that is to say, the credit offered by the financial system can't meet the needs. Some scholars think that when the regular financial institutions can't satisfy the credit needs in rural area, some irregular financial gradually institutions will develop significantly and gradually play a more important role in meeting the needs inside financing. The hold that restructuring the farmer oriented capital mutual aid is the core of rural financial reform. Without farmers'mutual aid and cooperative organization, the commercial and insurance can't develop in countryside. Only if the capital mutual aid organization develops and new financial cooperative organizations appear, the capital from commercial financial system can return to the rural area.This paper focuses on the offer and requirement of rural finance to study the problem of rural financial system. This paper first analyzes the situation of supply and demand of the rural finance, from the demand point of view china's current financial needs of rural areas has shown some new features:First, the growing diversity of funding needs. Second, increasing demands of fund. Third, Funding needs to extend the cycle. However, china has a serious shortage of supply of rural finance, the main manifestations of the farmers:first, a loan to meet the low level of farmers. Second, a decreased proportion of formal loans from financial institutions, private loans become the main way of borrowing. Third, the difficulty of the farmers obtaining loans still quite prominent. It's shows that China's rural finance is a serious imbalance between supply and demand, Mainly to demonstrate the following issues:agricultural credit supply and the status of agriculture in the national economy asymmetry, agricultural credit structure and industrial structure adjustment of agriculture does not match the low proportion of lending to in rural areas and agricultural industrialization asked not to be commensurate with contributions to household savings and its credit support received does not match the regional distribution of rural financial institutions, and rural economic development requirements of disharmony.Immediately, the article on china's rural financial imbalance between supply and demand Analysis of the causes of that led to this phenomenon, mainly in the following factors:first, the characteristics of rural financial decision of their own. Mainly involves a wide range of rural finance, poor stability, more difficult of financial management; Second, the supply of rural finance in rural areas can not meet the financial needs. Example, the strategic adjustment of the commercial banks operating directly reduction in the supply of rural finance, the own difficulties of the rural credit cooperatives, it is difficult to meet the financial needs of farmers and rural areas, policy-oriented banking services in a single, And the absence of agricultural insurance, has led to lack of effective demand for rural finance, adding to tension in the supply of rural finance; Third, the main strength of weak demand for funds in rural areas. Farmers and rural small-business risks, farmers and rural small businesses lack sufficient collateral. These factors together led to rural financial institutions in a "credit crunch" and the farmers and rural enterprises in getting loans situation.Finally, this paper presents some reform ideas of China's rural financial system: first, to further improve the rural financial organizational system. Namely, give full play to the policy-oriented financial functions and role in guiding commercial finance to develop the rural market, the deepening of rural cooperative finance, vigorously develop new-type rural financial institutions; Second, the strengthening of rural financial market construction. Establishment of a market competition mechanism, build the risk-sharing mechanisms and nurture the rural capital market.