Research On The Rural Financial Service System In Wenzhou

Since launched a new round reformation of rural financial system in July,2012,Wenzhou Municipal Committee and Municipal Government promoted the ruralfinancial reform to a new stage, with frequent spots and steady progress, by devotingmuch attention to the top-level design, research and making out the plan. But manydifficulties and obstacles are existing, the reformation is still in the initialstages.(1)The legal system is not strengthen. The rural formal and informal financialinstitutions are lack of a clear legal norm.(2)The market cultivation turn out to beinadequate. There is some weakness in financing corporation. Also the loan systemis not flexible sufficiently. Firstly, the market lack of effective financing collateral.Secondly, the imperfect credit system made the government lack of strong supportand policy inclination with credit risk compensation mechanism of agriculturalfinancial institutions.(3)The financial regulation is not in place. Existing ruralfinancial supervision is from the people’s bank of China, the China bankingregulatory commission, the local government financial regulators respectively. Someproblems could be found in division of duties which cause regulatory holes, exercisesupervision ineffectively, or over regulation. Now the competent administration andresponsibility of the subject can’t undertake the responsibility of the administration.Related department pay attention to the great importance of the regulator. Obviouslyit has neglected the improvement in regulatory idea, the perfection in regulationtechnology and the improvement of the quality and efficiency of supervision.This article explains the history and current situation of the rural financialservice system in Wenzhou from the formal and informal finance; discovers the thefinancial demand of Wenzhou rural economic main body, from the demand of rural finance in Wenzhou, by questionnaire and investigation; analyses the advantages,disadvantages, opportunities and threats of Wenzhou rural financial supply bySWOT method. The strength of that is the started with Wenzhou financial reform.Take the advantage of Wenzhou financial reform, develop rural capital aidorganizations, construction of rural property registration and trading platform; Whenit comes to the disadvantage, it is the absence of formal financial market and theexcluding of informal financial sectors; then the opportunity is the peasanthousehold credit registries have certain basis, expand range of collateral actively,expand the credit to support agriculture, and a large numbers of folk financinginstitutions were established; Last but not least is the threat. The financialinstitutions always neglect the farmers. Besides the financial regulation sectors failedto exercise supervision effectively. The new type of rural capital mutual aidorganizations are lack of effective relying. Finally the informal financial legal systemis not sound.Based on the preliminary understanding of the system of the rural financialservices in Wenzhou, this paper summarize the experiences in building ruralfinancial service system of United States, Taiwan and India. According to the facts ofWenzhou, this article propose four macro suggestions: increasing the function ofpolicy financial policy supporting, strengthening the innovation of financial products,improving the financial supervision system and ensuring the contraflow ofagricultural fund. Finally, in order to establishing a multi-level, diversified ruralfinancial service system with moderate competition and forming a powerful networkof rural financial service in Wenzhou, this article concludes that the best approachesto constructing the Wenzhou rural financial service system are as follows: firstly,enhancing the formal financial service system; secondly, consummating the informalfinancial service system; thirdly, cultivating the supporting system. From the aspectof perfecting Wenzhou rural formal financial organization service system, it issuggested that the tax benefits could lead commercial financial institutions, besidesdeepening the reform of rural credit system. Absorb private capital to develop the village Banks, improve the payment and settlement construction, strengthen theconstruction of multi-level rural insurance system。Perfecting rural informal financial service system in Wenzhou, it is suggestedthat encourage the development of rural capital society, speed up the construction ofrural equity trading market, started the modern urban agriculture direct funds; In theaspect of Wenzhou rural financial service system supporting measures, It issuggested that carry out the housing mortgage loans, to develop the scope of therural collateral, perfect rural finance credit system, promote the rural infrastructureconstruction for settlement, intensify the support for financial aid, to establish thefolk financial information publishing platform.