The Development Of China’s New-type Rural Financial Institutions-----based The Analysis Of Behavior Mainstays’ Partiality

Eural finance in China faces both development and transition challenges. On one hand, there are small farmer-specific difficulties in accessing credit, as common in many developing countries. On the other hand, there are transitional problems emerged from rural system formed underthe previous planned economy system. To resolve the serious imbalance of supply and demand of ruralfinance and promote villages construction, Chinese government began to relax the rural financialpolicesto attractthe investment of private and foreign capital which c an promote the economic development of villages. Since the second half of2005, the PBC has piloted microfinance companies in five provinces and regions and in May2008, the pilot was expanded nationwide. In recent years, the newly opened rural financial market has provided rural economic entities with diverse financing option and has introduced the concept of small-scale financial institutions. These institutions include village banks, lending companies, micro-credit lending companies, and credit shops. The new-type rural financial institutions have increased sharply. Presently, there are726village banks,10lending companies,50credit shops and4282micro-credit lending companies. Since itfs quickly development, many problems have emerged which attract some experts attention.Based on the description of the relative theories, this essay pays attention to the behavior mainstays’ partiality to study the development of new-type rural financial institutions. Then we can explore the deep reasons whic h restrict the development of new-type rural financial institutions. It first describes the defect of the traditional rural financial institutions which can not play a role as the effective finance suppliers, the current situation of new-type rural financial institutions and the strong credit demand of farmers. Besides, it tries to use some theoretical approaches such as farmer credit demand theoryand game theory to explore the reasons that lead to many questionsabout finance supply and demand, as well as how rural financial supplyand demand is influenced by the partiality of relative behavior subjectssuch as new-type rural financial institutions rational choice, central andlocal governments’ rational choice and peasant households’ lendingand borrowing behaviors. In the end, there are many suggestions forthe new-type rural financial institutions’ development to make thepeasant households’ loans and financial services achieve contentment,and the rural financial system can be operated orderly andhigh-efficiently.