An Study On Corporate Governance Of Rural Commercial Bank Companies In China

In 2011,the CBRC(China Banking Regulatory Commission)confirmed that the reform direction of the Rural Credit Cooperatives would be setting up the Rural Commercial Bank.But the reform is not simply renaming.It requires us to continue exploring the appropriate way to adapt to the economic development better after.The real contradiction lies in the fact that,on the one hand,the rural credit cooperatives,which have been entrenched in rural places,and dealt mainly with peasants for more than 70 years,has drifted off course in the tide of joint-stock reform;on the other hand,agriculture-related financial supply under the strategy for rural revitalization is soft and weak.As a result,the financial demands of peasants in rural areas have not been satisfied or encouraged.This means the reform of rural credit cooperatives should focus on the main business and return to its source.There are many reasons why Cooperative Finance tipically the rural credit cooperative,disappears,from appearace to reality.But the major reasons are the long-time indistinct of principal and legal status,as well as the inequality between rights and obligations.When the Central Economic Work Conference held in December 2019,it was proposed that during the reform,financial institutions should back to basics,divide responsibilities,cooperate with each other.Therefore,currently,the reform of rural credit cooperatives should focus on the principal contradiction and give full play to the leading and consolidating functions of laws to strive for the fusion and win-win situation of commercial profit and agriculture-support policy for rural commercial bank.This paper includes five parts.The first part introduces the concept,theory and mechanism of corporate governance.Corporate governance is a full set of mechanism,mainly composed of external mechanism and internal mechanism.The second part analyzes the problems of the governance of Rural Credit Cooperatives from the perspective of external mechanism and internal mechanism,and explores the causes of the problems,which is laggard legislation and pervasive insider control.The third part introduces the advanced experience in governance of China’s front-runners in joint-stock reform,namely Chongqing Rural Commercial Bank and Changshu Rural Commercial Bank,to give reference to other institutions in development.The fourth part illustrates the practice in rural corporate finance of Germany,Japan and the United States.They have valuable experience in legislation and construction of rural financial system.The fifth part poses some suggestions on optimizing the governance of China’s rural commercial bank companies in terms of external and internal mechanisms.External mechanism is the key to the future development of rural commercial bank.Therefore,the fundamental solution is to legalize the rights,obligations and responsibilities of all governance subjects,to set up a full-fledged set of facilitating measures,and to optimize the remedy mechanism.To improve the external governance mechanism,first,it is advised to amend the company law and improve the institutional mechanism to ensure the decentralized implementation of shareholders’ meeting,board of directors,board of supervisors and senior management;second,step by step,we should enact the Law of Rural Commercial Bank—it will legally confirm the principal status of Rural Commercial Banks,to legalize the right of commercial profit and the obligation of agriculture support,and to improve the compensation and relief mechanism;third,we should improve the supporting system to stimulate the enthusiasm of Rural Commercial Banks in agriculture support.