A Research On Market Orientation And Development Of Township Banks In China

In China, the rural areas have apparently lagged behind urban areas in reforming the financial system. The demand for rural finance has not been met. The inadequacy of Microfinance institutions and financial outlets, as well as their low competitiveness, has restricted the development of the rural areas. For a long time, rural costumers have not been properly served by institutions that clearly understand their financial needs, which has caused financial repression to a large extent.Country and county financial development is significant for modern financial development, and is crucial in achieving the goal, set forth by the Party, and coordinative urban-rural development. How to solve the world puzzle of financial difficulty of the small and medium enterprises and rural costumers has long been a major concern of all levels of the Party. China is striving for a proper way to push the rural financial reform. Improving rural financial system and mechanism to meet the new demand generated by the development of agriculture, farmer and rural area, accelerating the construction of a new type of highly effective multi-investment banks, and establishing a multi-level, wide-spread and sustainable rural financial system, are the ways to solve the current problem of rural financial innovation.The author of this paper endeavors to find out the problems existing in today's rural financial institutions and outlets and its solution through analysis of the original orientation of country and county banks, and the successful example of some foreign rural banking, with an illustration of the current developmental state of the rural financial institutions and outlets in Sichuan Province. These analysis and discussions are hopefully to provide some help in establishing multi-investment rural banking systems that are wide-spread, flexible and effective, and thus innovating the rural financial service, and making it a great support in the construction of new socialism countryside.This paper consists of four parts. The following is a brief introduction to the contents of each chapter.Chapter One lists the features of the current Chinese financial system and points out the significance of rural financial service in China. This chapter also discusses the supposed orientation of rural banks through illustration of the successful foreign country and county banks.Chapter Two offers a brief introduction to the development of the rural financial institutions and outlets in China and especially in Sichuan Province through the year 2007 to the year 2010.Chapter Three offers an analysis of existing problems in the development of rural financial system in Sichuan Province, from the perspectives of the validity of equity structure, the scale of deposit and load, allocation of funds, competitiveness and profitability, and the compliance of operation. Through these indices the author believes that the problems include the relatively low overall profitability, the difficulty in drawing deposits, insufficient funds, unbalanced loan, ineffectiveness in credit risk control, high risk in operation, and the neglect of the SMEs and "three rural" orientation, etc.Chapter Four suggests the solutions to these problems. First is to improve corporate governance structure. Second is to establish rural banking outlet system, to expand banking service, so as to get the first-hand information of the needs of rural costumers and the enterprises, and to promote publicity and attract more fund. Third is to create a good environment for the development of the rural financial system through establishing deposit insurance system, speeding up the market-oriented reform of interest, pushing for more support from political policies, and establishing risk compensation system, etc. Fourth is to innovating financial measures, to exploit financial product that is welcomed by the rural market. And the last is to complete the supervisory system, which means the financial supervisory department should lead the country financial institutions to seting up effective corporate governance structure and banking organization, and in the meantime to set up strict access system and information disclosure system, as well as meticulous operation supervisory system.The innovation of this paper is as follows:First, the author did financial investigation on a large scale, cooperating with Sichuan BRC, thus enhancing the validity of the citing of statistics in the second the third chapter. In conclusion this paper has pointed out the problem and suggested some feasible solutions.Second, this paper analyzes the way that township banks can properly develop themselves through the perspective of banking supervision. This can provide a more objective understanding of rural financial institution and outlets'development at different stages, which in turn could make the analysis more objective and the solution feasible, enhancing the direction and practicability of this research.the shortage of this paper is as follows:The revolution of the township Bank are in the phase of exploration, our experiences and basic statistic date are limited,thus the the economic data analysis might not be all-around enough., and still has room for improvement.Meanwhile,due to the author's experiences of life and college, and the lacking of the knowledge of the accent economy and finance ploicy,the author's opions and comprehension of the township bank may not be thorough enough.