The Empirical Analysis On Competitiveness Of The Rural Credit Cooperatives In Shandong Province

In 2003,the State Council launched a pilot project to deepen the reform of the rural credit cooperatives(RCC). It has made great progress and initial results in nearly eight years. For the RCC, their capital strength enhanced obviously, non-performing loans decreased significantly, and their profitability increased greatly. Practice proved that the reform had been effective and the RCC was becoming stronger increasingly. The RCC continued to increase their credit support for agriculture and farmers in rural areas. They have played an important role in increasing farm's income, promoting the modernization of agriculture as well as developing the rural economy increasingly.This paper analyzed the achievements of the reform of RCC in Shandong Province, outlined the recent status and pointed out the problems in the development. Based on the theory and analysis of competitiveness, combined with the concept of the competitiveness of commercial banks, the paper redefined the meaning of the competitiveness of RCC. The competitiveness of RCC was the integration of hard power and soft power. It was not only the simple sum of these two factors, but the "multiplier effect". In order to evaluate the competitiveness of RCC, the paper listed a series of indicators, including two secondary indicators, eleven third indicators, and sixty-four bottom indicators. In accordance with sector and geographical features, and the principle of "One City, an institution", this paper selected 17 agencies from 134 RCC in Shandong Province, including five rural commercial banks, five rural cooperative banks and seven RCC. The paper also calculated their hard power using the method of Entropy and Gray Correlation, while soft power was estimated by analytic evaluation. After collecting the opinion of experts, this paper endowed RCC hard power and soft power with the weight of 40% and 60% respectively, calculated the overall competitiveness score of RCC. The paper ensured the accuracy and consistency by combining objective and subjective analysis and the results of an empirical analysis.The empirical results showed that the overall competitiveness of RCC was growing in recent years in Shandong Province. The competitiveness of the rural commercial banks have topped out, followed by the rural cooperative banks, RCC were the worst. More than 70% of the rural commercial banks and rural cooperative banks were located in eastern Shandong. They had promoted the development of the RCC because they had created the best economic basis, financial environment and the social credit environment in these regions. The competitiveness of RCC was generally low because of the lower economic strength, and further optimized development environment in southern and western Shandong.Finally, this paper proposed several suggestions to enhance the competitiveness of RCC. By using of the force of government, relying on the superiority of legal advantages and regional information, RCC should continue to improve corporate governance, change their operational mechanism, followed the path of"process bank". The operating philosophy and experience of rural commercial banks and rural cooperative banks also provided the inspiration and reference for RCC to convert their mechanism.