County Financial Arrangements For Empirical Research

In china, the development of finance in counties is falling behind. The financial arrangementin counties includes five main problems. The first is that capital in counties has been flowingout through the financial departments. The second is that the financial development incounties is slower than economic development. The third is that the amount of loan frombanks in counties has been descending for many years. The fourth is that financial contest isintense in county towns but loose in rural area, intense in deposit market but loose in loanmarket, intense between big banks but loose to credit cooperatives. The fifth is that thelevels of financial departments are too lack. It is obvious that the counties are lack of thefinancial departments which serve middle sized and small companies.Three factors caused unreasonable financial arrangement in counties. Changes of institutionare completely different between finance and economy. Changes of economic institutionhave been developing among the people, but financial institution is supplied by government.The property right of financial departments in counties is unreasonable. The counties arelack of the financial departments which possess independent property right. The state-ownedfinancial departments don't match the public-run companies. The repression to finance fromthe government has been restricting the entrance of new financial departments, particularlypublic-run banks.The reasonable arrangement of the financial departments in a county should be a system inwhich the small local financial organizations have an advantage and others are subordinate.We may improve the financial system in counties on five aspects as follows: (Ⅰ) The small local financial organizations should be developed rapidly. (Ⅱ)The branches of the four big commercial banks should be restructured. (Ⅲ)The bank which serves as a guarantor for the demands of policy finance should beerected by reforming the Agriculture Development Bank of China. (Ⅳ)The post saving bureau should expand its service scope, offering small amount loans,issuing credit cards to peasants and lending funds to the small local financialorganizations. (Ⅴ)The lawful folk finance should be allowed, and even the folk financial organizationsmay be allowed to diversify the financial departments of counties.