An Research On Factors Affecting And Evaluation Of Performance In Rural Banks

In the last three years,rural banks are the largest number of new national rural financial institutions, which increase the supply of rural finance and promote competition in rural financial markets and improve the rural financial services. The performance of rural banks also relate to their own sustainable development. Therefore, establishing a scientific system to evaluate their performance and analyzing the main factors which affect their performance play an important role in guiding the way of developing rural banks. However, do china’s rural banks operate well? Which factors affect their performance? And how to improve their performance?To research the problems above, first, we analyze the international research on performance of community banks and rural banks, combine with the method of commercial bank’s performance evaluation system, and research on the status of rural banks, establish the performance evaluation system, from all aspects such as the safety, liquidity, profitability, capacity development to determine the weight of each indicator and evaluation of models by Factor Analysis. Second, establishing multiple regression model, which from the aspects of the ownership structure, size of asset, structure of asset, safety of asset, profit structure to find the main factors that affect the performance of rural banks, and ultimately determine the degree of the influence of various factors.Finally, the article concluded as follows:First, in the period of rapid development,the rural banks, which have high quality and profitability of asset quality, better capital efficiency and financial management capacity, improve their steadily of operation and fulfill the obligation of benefiting the agriculture as stipulated in the government regulations. Second, it can be seen, the performance of most of the rural banks which erected earlier is not ideal, have increased after a period of management operations. And the performance of the rural banks which in the wealthy place is much better than these in the poor place. Third, developing intermediary business and lower liquidity have contributed to the improvement of the performance of rural banks; a high concentration of equity is negative of their performance; from the study of performance of rural banks in Jiangsu province, we know that size and structure of asset, the nature of their shareholder don’t have an very significant impact on their performance.There are some policy recommendations for improving operating performance of rural banks, first, we should strive to develop intermediary business and increase non-interest income of rural banks; second, diversified ownership structure can be followed to reduce ownership concentration. And Lead private capital to participate in the establishment of rural banks and stimulate owners of private capital for investment can also diversified the ownership structure of rural banks.