Impact Of Rural Finance Market Structure On Rural Credit Cooperatives Performance

In order to meet the development needs of the rural economy, and effectively solve the growing financial services needs of farmers, the contradiction between supply and demand of rural financial services, policy on decreasing the access threshold in rural financial market and establishing a modern rural financial system have been published since 2006, which aims at encouraging all types of financial institutions to enter the rural areas, innovating financial services for’three agriculture’,and change the original monopoly structure of the rural financial market to diversification and competition. However, the structure of China’s rural financial market exist great differences because of the difference in economic level and geographical environment. Meanwhile, the Rural Credit Cooperatives in the rural financial market have deeply influence due to the long-term policy support, and some farmers have less knowledge of other financial institution so that different regions have different effect on the implementation of open market policy.Under this background, firstly we collect and sum up the related research of scholars in order to provide a theoretical basis for the empirical analysis. Secondly we measure the structure of rural financial market by market share index and H statistical which many scholars have applied. Thirdly we evaluate the changes about operating performance of Rural Credit Cooperatives in Longyan during 2006-2014 by a variety of performance indicators. Finally we make an empirical analysis of the influence of rural financial market structure on the performance of Rural Credit Cooperatives based on the SCP framework of Industrial Organization Theory, which aims to revealing the change and development of rural financial market structure and its changes in what would be the impact on the performance of Rural Credit Cooperatives, so as to we provide some reasonable suggestions for improving rural financial market and enhancing the operating performance of Rural Credit Cooperatives.The empirical results show that:First, Longyan rural financial market is monopolistic competition which is monopolized by Rural Credit Cooperatives, and the degree of competition in different levels of economic development of rural financial market are quite different. In developed areas, the degree of marketization and monetization is high and the financial market competition is more intense. In underdeveloped areas, the financial market is relatively closed and the market competition level is low which is monopolized by Rural Credit Cooperatives. Second, the achievements of the Rural Credit Cooperatives in Longyan gradually revealed since the deepening of reform, operating status and asset quality have been greatly improved and enhanced, the operating performance is also steadily improving. But in areas with different levels of economic development, the Rural Credit Cooperatives have regional differences in profitability, cost control, risk resistance ability and the effect of supporting agriculture. Third, market share has no significant effect on the operating performance of Rural Credit Cooperatives in Longyan. And it is nonlinear relationship between the level of market competition and the operating performance of Rural Credit Cooperatives in Longyan. That is, with the level of market competition continue to increase, the operating performance of Rural Credit Cooperatives will be reduced and then increased and then decreased, its change is closely related to the level of the rural economy, rural financial market environment, rural financial reform policies.According to the research conclusion, this paper proposes that the construction of multi-level rural financial market system should be adapted to local conditions and strengthen efforts to support the cultivation and development of new types of financial institutions in rural areas in order to promote the healthy and orderly development of the rural financial market and incentive to enhance the operating performance of Rural Credit Cooperatives. And further deepen reform of Rural Credit Cooperatives to enhance the ability of market competition and operating performance. Meanwhile, we should promote the reform of the rural market-oriented interest rate to stimulate the enthusiasm of various financial institutions to enter the rural financial market for promoting the construction of diversified rural financial system.