Research On The Mechanism Of Banks Supporting County Economic Development Under Inclusive Finance

With current national call for the development of Inclusive Finance,this paper uses Anhui Province as a sample to explore measures to enhance Inclusive Finance services and promote economic development at county level.Considering the composition of county-level financial market,this paper focuses on the role of banking industry in Inclusive Finance development.Based on the panel data of 59 counties in Anhui over the past 10 years and time series data of banks over the past 8 years,this paper selects specific indicators and establishes mathematical models,and seeks to answer three important questions with a combined approach of theoretical,analytical,and empirical study;a.What is the status of financial support in Anhui Province? b.Has banking industry effectively supported development of county-level economy in Anhui Province? c.At county level,how to design and establish a specific mechanism to optimize the quality &efficiency of Inclusive Financial services?Key findings are as follows.First,in Anhui Province,financial development differs across districts due to the early planning of economic development process,and north and southwest lag behind other regions.Second,the banking industry does play a significant role in supporting the development of county-level economy,and intensity of this role differs across counties.Third,from the perspective of micro-economy,reducing the comprehensive cost rate of banks is significantly conducive to reducing the interest rate of their loan.Fourth,from the perspective of intermediate-economy,information asymmetry can be reduced in the following ways;to enhance transparency of enterprises' information disclosure,to encourage differential competition among banks,and to increase number ofconnections between banks and enterprises.Fifth,from the perspective of macro-economy,Inclusive Financial legal system can be strengthened by improving the mechanism of credit maintenance and asset disposal,creating a business environment with integrity,increasing the protection of financial consumers,and tightening the supervision on banks.Sixth,impact of diversification differs across banks.Only banks with higher diversification level can reduce their credit rate through further diversification.The third to the sixth findings can also be broadly applied in improving the quality and efficiency of Inclusive Finance supported by banks,and promoting county-level economic development of other provinces in China.