Study On Profitability Of Zhejiang Rural Cooperative Financial Instituions

In recent years, with a series of structural reforms of the country in various fields of the national economy, the reform and development of China’s banking sector has attracted more and more attention. After30years of China’s financial system reform, China has basically formed a financial service system which takes commercial finance as principle thing, rural cooperative finance and policy finance second, a variety of informal finance as supplementary. Rural credit cooperatives as an important component of China’s financial system and as the main force in rural finance, it plays a positive role in supporting rural economic development, meeting farmer’s daily financing needs and assisting the development of rural small or medium-sized enterprises.The profitability of rural cooperative financial institutions is the important standard to measure its competitiveness and influence. Only if improves the profitability, can constantly optimize its capital gearing, increase the ability of withstanding risk, promote the sustainable development of rural cooperative finance and thus bring into play its function in rural economy’s better and faster development. The paper starts with the present situation and current problems of rural cooperative financial institutions in Zhejiang Province, and carries out the theory and case analysis which affect profitability. In part of theory analysis, the paper mainly elaborates from the perspective of the institution’s own factor, industry factor and macroscopic factor. The result shows that in short term the biggest influence factors to the profitability of rural cooperative financial institution in Zhejiang are inner management factors, such as property scale, property quality, capital position, profitability structure and level of cost management. As to the industry factor and macroscopic factor, although they do have some influence to the overal profitability, the influence degree is far smaller than its own factor. In part of case analysis, the paper selects one rural cooperative bank in Zhejiang, analyzes three years’assets (liability) income (cost) in2010-2012term by term, deeply dissects the intermediate bussiness income and bussiness and administration cost and come to the conclusion that the interest net income in every business, intermediate business income proportion, credit asset quality and business and administration cost are the main inner factors to influence the profitability. Furthmore, the paper measures their particular influence degree. The paper also applies the comparative analysis method which compares the rural cooperative finance in Zhejiang with11banks in the same business, including5state-owned banks,3sharehold banks and3intermediate and small banks. The paper selects five index in the recent three years, total profit, clear profit, return on capital, return on assets and cost income ratio, to do the comparative analysis. Through the comparative analysis, the paper judges the advantages and weakness between rural cooperative institution in Zhejiang and other institutions in the same business. In the end, based on the paper, the author puts forward some policy suggestion to improve the profitability of rural cooperative finance institutions in Zhejiang.