Research On Village Bank’s Risk Evaluation And Prevention

Since the first village bank was established in March,2007, which spawned lots of newvillage banks throughout the country. And they play an important role in promoting ruraleconomy, improving the dual structure in urban and rural economy and completing the ruralfinancial service system. But the village bank belongs to new rural financial institutions andthe time not very long since they established, so they are in a starting stage in developing,their ability to withstand risks is still weak. Once some risks arise in a village bank, it willthreaten the bank’s operation; even force it to face bankruptcy. The village bank will not onlyrun counter to the goal that give service to agriculture, rural areas and farmers when itestablished but also add burden of rural financial system and has an adverse impact on ruralfinance’s prosperous when it has a bad management. Therefore, understanding the risks ofvillage bank scientifically, evaluating them rationally, guarding against and controlling themas efficiently as possible can greatly reduce the rate of incidence of risks and then cut downthe losses to the village bank when risks present, make village banks have a better and fasterdevelop.This paper has five parts, among which the key to the study are the second, third, andfourth chapter. The first chapter introduces the background, proposes and sense of thisresearch, and provides an overview of present research on village bank’s risks of internationaland national scholars to lay the groundwork for following research. The second chapter isbased on the first, which provides a definition of village bank and its risks then has a moredeeply analysis and studies on the characters of each of them. It raises seven kinds of risksduring village banks running combing with the risk type of commercial bank and the villagebank’s specialization，then analyzes in detail source of each kind of risk and the relationamong them. The third chapter builds a village bank risk evaluation index system according tothe seven kinds of risks above which includes eight secondary indexes and twenty-nine thirdindexes. Then the theoretical basis of village bank’s risk evaluation is expounded, which isfuzzy comprehensive evaluation method and AHP. The fourth part is a case about villagebank’s risk. In this part, apply the model made in chapter three to the case of X Village Bankto evaluate its risk. Firstly, calculate each indicator’s weight by AHP. Secondly, evaluate eachrisk with last two steps by fuzzy comprehensive evaluation method. The results indicated thatit substantially fits with the reality of village banks. At last the paper provided risk prevention strategies according to the rural bank’s truth painstakingly. The fifth chapter is the conclusionof this paper， which summarizes the research above and points its limitation and aspects inneed of improving, then looked forward to future research in this area.