A Study On Operating Vitality Release Of Rural Commercial Banks

Rural credit cooperatives are the body of China’s rural financial system and the main force toserve “issues of agriculture, farmer and rural area”. Healthy and effective operations of them can greatlyimprove the efficiency of rural financial services, maintain the stability of China’s rural financial system,and thus promote the development between urban and rural. Rural credit cooperatives have experienced anumber of reforms in the past few decades. However, these reforms are not complete due to some historicalissues and rural credit cooperatives’ own problems. Therefore, China’s rural credit cooperatives still facemany difficulties both in system and in operation.Under the urban-rural binary system, the development of China’s rural financial is hysteretic. Thepresent rural financial system is not able to meet the pluralism financial needs of the development of ruraleconomic. As the major force in agriculture, rural credit cooperatives haven’t played an important role inrecent years. The basic features of cooperative finance are fading. With confused governance structure,unclear property ownership, and increasing proportion of non-performing loans, many high-risk rural creditcooperatives come into being. In order to adapt to the current rural financial environment, as well as tomeet their development needs, it must have to reform the property right system of rural credit cooperativesas it has become the top priority of China’s rural financial system reform.In the system of rural credit cooperatives, there are three kinds of organizational forms,cooperative system, joint-stock cooperative system and stock system, which correspond to the traditionalrural credit cooperatives, rural cooperative banks, and rural commercial banks respectively. China BankingRegulatory Commission madeit clear in2010, that “there would be no more new rural cooperative banks,all the existing rural cooperative banks should be transformed into rural commercial banks, and qualifiedrural credit cooperatives were encouraged to restructure into rural commercial banks.” Thus, in the reformof rural credit cooperatives, the formation of joint-stock commercial banks in rural areas is the ultimategoal.Rural credit cooperatives’ choosing joint-stock in the reform is inevitable. Cooperative andjoint-stock cooperative system has been proved to be imperfectly suited to the current market economywith issues such as unclear definition of property rights, not standardized legal protection, obvious absenceof the owner, and lack of business vitality. Neither of them can solve the inherent problems of rural credit cooperatives. While rural commercial banks after the reform introduced in the joint-stock corporationproperty rights system. Its core contents are equal shares, limited liability, and equity transfer. As the legalentity and market subject, it has irreplaceable advantages in clearing property rights, strengtheninggovernance, promoting business and other aspects. In contrast, rural commercial banks are business entitiesthat are more suitable for the development requirements of the market and the economic. Henceforth, ruralcredit cooperatives and rural cooperative banks need to carry out joint-stock reforms.In this paper, the guiding theories are credit cooperative theory, corporate governance theory, andmodern property rights theory. The research methods are literature research and empirical analysis research.Before writing the author accessed to a large number of domestic literature data on rural credit cooperativesreform issues, sorted out the core ideas and inadequacies of the different scholars, determined the coreissues on the basis of a good grasp of the current status of research, such as Why rural credit cooperativesshould reform, Why the reform should choose the joint-stock, What the advantages of the joint-stock are,and How the joint-stock release operating vitality.Firstly, the article briefly introduces and comments on the reform and development of rural creditcooperatives. Next it points out the main problems rural credit cooperatives are facing. On this basis, itdiscourses the inevitability of the joint-stock reform in rural credit cooperatives, and then introduces theformation conditions and the establishment process of rural commercial banks, probes into the reason whythe rural credit cooperatives reform into rural commercial banks can release operating vitality. The last partis empirical analysis. Taking Xinzheng Rural Commercial Bank as the study object, the article analyses itsoperating difficulties before the reform and the specific representations of its operating vitality releasingafter, which leads to the conclusions of this study.The front part of the article is about the present situation of rural credit cooperatives andrestructuring the overall introduction, after the part is the specific case analysis. The structure arrangementis based on the logic that from the overall to local, from the more general to the specific. The article hopesto summarize the laws of universal significance from particularity, to provide reference for rural creditcooperatives which are under the reform.