Rural Financial Environment And Financial Efficiency Correlation

Financial vulnerability is an important issue in the current rural finance. The problems such as backward economic development in rural areas, over participation of administrative power and poor credit environment cause the presence of rural financial ecological environment not to be good; the existence of binary system of rural finance, financial property rights system defects and the relative backwardness of rural financial market development lead financial efficiency to be low. It is necessary to study the relationship between financial ecological environment and financial efficiency and to explore the impact factors of the financial ecological environmental to financial efficiency. In response, this paper puts forward the proposition on correlation of rural financial ecological environment and financial efficiency. It proves a correlation correlation between the two by empirical studies, and seeks the approach to improve the rural financial ecological environment and to promote the rural financial efficiency, in order to provide theoretical and empirical evidence for rural financial reform and development.The paper starts from the studies of relationship between the financial ecological environment and financial efficiency at home and abroad, and applies the Theory of Financial Development, Financial Ecology and Financial Efficiency to the theoretical analysis of interaction of them.The paper analyzes the current situation of rural financial ecological environment and financial efficiency respectively. With the establishment of comprehensive evaluation index system of them, the paper uses BP artificial neural network model and fuzzy comprehensive evaluation method to evaluate the status of the two systems and obtain a conclusion that both of them are at a low level.In regarding to the correlation, the paper picks the period of 1985-2008 years as the sample to take an empirical analysis with the help of canonical correlation analysis, Granger causality test to analyze the correlation between rural financial ecological environment and financial efficiency, and the positive analysis results show that-there has been significant correlation between two of them:optimization the rural financial ecological environment helps to improve the rural financial efficiency, which further contributes to its own. And then there is a good interaction between the two of them, a virtuous circle of rural finance can be made by treating the relationship between the two reasonably.Based on the conclusions in the study, this paper puts forward policy recommendations. By improving the rural economic, financial, institutional and socio-cultural environment to construct favourable rural financial ecological environment contributes to improve financial efficiency. Meanwhile, by the establishment of mechanisms that capital flow back to rural areas and promoting the reform of property right system of rural credit cooperatives to improve rural financial efficiency make for better rural financial ecological environment. Thus, working together from both sides can achieve the harmonious interaction between the two of them.