Government Motivation,Economic Environment And Rural Financial Innovation

In recent years,multiple "No 1 Central Documents" on the problem of "agriculture,rural areas and farmers" have been continuously released in our country to activel y promote the rural financial reform and innovation.Therefore,t h e r u r a l f i n a n c i a l s y s t e m t h r o u g h o u t o u r c o u n t r y h a s b e e n i m p r o v i n g and financial products and service innovations tend to be characteristic.New modes of credit business,such as land mortgages,assets mortgages and so on have been actively carrying out in eastern and central China.While in western China,they m a i n l y s t r e n g t h e n i n n o v a t i o n o f a g r i c u l t u r a l i n s u r a n c e p r o d u c t a n d t h e regional development difference is obvious there.At present,the domestic market economy development is not mature enough,and the effect of financial reform pilot in many places varies.The differential external intervention of the government is the main cause of such region differences in financial development,while it is the region differences of rural urbanization and financial environment that in a large part exacerbate that region differences.Therefore,the way how the government motivates rural financial innovation while do not interfere the financial market in rural areas relates directly to the effectiveness of the rural financial reform and innovation in our country.And the effectiveness of intervention of the government relates to the external environment of economy and finance in the rural areas themselves,which is noteworthy in rural financial innovation and is of significance for the government to improve the efficiency of the financial reform.Starting from foreign classic rural financial theory,this paper analyses the necessity of government intervention in rural financial market and studies the mechanism o f a c t i o n o f g o v e r n m e n t i n t e r v e n t i o n i n r u r a l f i n a n c i a l i n n o v a t i o n b a s e d on theory of asset portfolio and thetheory of single credit game.Then it constructs econometric model and studies the influence ofgovernment motivation and market competition respectively on rural financial innovationunder different level of urbanization and per-capital income based on the panel data of 30 Chinese provinces and cities in mainland from 2008 to 2014.Result shows that in the areasthat urbanization and per-capital income aren't high,effect of government motivation is remarkable and the affect of market competition on rural financial innovation is more effe ctivein which that is high.Through case study of financial reform pilot by the government in Tiandong county and Wenzhou city,it further verifies the conclusion and proposes that we shouldtransform mode of government intervention and improve environment of rural network.