The Financial Linkages:Theory And Practice

At present, as the constant development of economy in rural areas, the demand for financial resources in rural market is increasing. How to try to meet the growing demand for loans in rural areas become the focus of attention. Although the government’s constant support policy, the rural regular financial institutions’ constant reform, but the effect is actually unsatisfactory. Due to the high risk, cost etc, the rural regular financial is abandoning the rural customers. The rapid development of informal finance meet the rural credit demand to a certain extent, but also bring many problems. At this time, some agriculture leading enterprises as like through the connection with the formal financial show a unique advance.Informal finance have information advantage,but it also bring some hidden dangers and operation risk to our China’s financial system. Formal and informal financial have its rationality coexist. They are not only is a simple alternative relations,but also complementary relationship. Based on this kind of complementary relationship, the connection arises at this historic moment. It means that through the informal financial, the formal financial will directly or indirectly increase money supply, and the farmers will get more loan. This paper mainly analyzes the coupling model, conditions and effect. Think that complementary relationship makes the connection probable. The main means of connection is divided into three kinds:the first is to connect with the full-time lenders, second is to connect with the ream financial, third connection is bound credit. In addition, the paper points out that the effect of coupling depends on the nature of informal finance. Businesslike informal financial ask less interest compensation requirement, the more likely the connection, such as production cooperatives and agriculture leading enterprise. This enterprise as like can obtain profit compensation outside instead of the interest, and this enterprise normally participate in the farmer’s interest. So is considered to be an important part, and this is the innovation of this paper. In the rural finance market of Jiangsu province, This paper made a discussion about farmer’s credit under the connection between formal and informal financial. The first chapter contains the research background and literature review. As the core part of this paper the third chapter analyzes the connection pattern, effect and condition through detailed theoretical analysis. The third and fourth chapter for empirical. First make survey and empirical analysis about518families in Xuzhou, Suqian,Yanchen of northern Jiangsu. And make choose regression analysis with eviews software. To the connection in xuzhou and Yanchen finance market, the writer also do some example analysis. The result shows that:the formal and informal financial exist widespread complementary relationship, the premise of connection exist. At the same time, the agriculture leading enterprise in the connection makes coupling more effective, and it will realize the three parties common development. Specific conclusions as follows:(1)the connection based on complementary relationship will increase rural capital supply, alleviate formal finance’s hazard, improve farmer’s expected return.(2) connection between formal finance and the full-time lenders are more easy to form competition, which is difficult to push forward. Instead, the agriculture leading enterprise has its own advantage to connect with the formal finance.Finally, the article made some proposal on the basis of the conclusion of this paper, and summarizes the deficiencies of the research.