Development Mechanism Of New Rural Financial Institutions

With the steady progress in building a new socialist countryside and urbanization, the inadequate supply of financial in China’s vast rural areas become more and more stand out, and need to be solved right now. December21.2006, China Banking Regulatory Commission issued the "Opinions on the adjustment of access policy to relax banking financial institutions in rural areas to support the construction of a new socialist countryside better ", which clearly claimed the government will actively guide and support domestic and foreign industrial capital, private capital, financial capital to establish, invest, acquire village banks, loan companies and rural fund mutual cooperatives and other new rural financial institutions in rural areas. The central government hopes to introduce competition mechanism and revitalize the existing capital stock to increase financial supply, improve financial services and rich rural financial system.Based on China’s rural finance system changes and supply and demand characteristics, this paper analyses the development of village banks, loan companies and rural fund mutual cooperatives, and the role they played in the improvement of rural finance, this paper is divided into six parts, the first part is about the research background and significance, as well as research results at home and abroad; second part is about China’s rural finance system changes and it’s supply and demand characteristics, review process of the rural financial system reform, analyses the overall financial status of the rural from the perspective of the supply and demand; third part analyzes the status quo of new rural financial institutions, village banks, loan companies and rural fund mutual cooperatives respectively; the fourth part uses the model to analyze the performance of new rural financial institutions and it’s relationship with agriculture; the fifth part is divided into domestic and international experience in rural finance development; the sixth part is ideas for China’s new rural financial institutions in the future based on this paper’s research.Although the scale of development is still limited, but the overall financial institutions are running well, risk control and development are stable and orderly, and play a positive role in alleviating the situation of China’s rural financial repression so far. But problems such as capital resource, risk control and internal management impede the development of new rural financial institutions, therefore, it is necessary to strength guidance and support from the government, improve modern management and finance innovation in new rural financial institutions.