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The Discussion of Chinese Rural Financial Supply Deficiency

Author: ZhengRuoYu
Tutor: YangFengLu
School: Shandong University
Course: Industrial Engineering
Keywords: Rural Finance Supply Deficiency Discussion
CLC: F832.35
Type: Master's thesis
Year: 2011
Downloads: 230
Quote: 0
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Abstract

This paper first gives a clear-cut definition:rural finance is a general name for rural financial institutions and instruments which aim to sustain rural production and operation activities.It includes two parts:formal finance and informal finance(Zhaoting Yang,2009), which is classified according to whether it has been permitted by government or financial regulation department or not.In the following part, this paper points out that as an agriculture country, rural finance is the weakest link in the whole modern financial system. China now has over 30 provinces, more than 300 cities,2070 counties, over 30 thousand towns,530 thousand administrative villages,22 to 23 thousand farming households,800 million farmers(Population Division of Bureau of Statistics shows the data is 900 million while Rural Division shows 700 million),120 million rural migrant workers in cities. Rural population, almost accounting for 70% of national population, only create 50% GDP and 30% fiscal income. This reveals a serious problem that there is a great gap between rural and urban areas and the development of rural areas falls far behind urban ones. It has been a long time when rural finance becomes the weakest link of modern financial system. So far, China is still a developing socialist country. Therefore, the problem of Village, Agriculture, Farmer is not only the foundation of economic development, but also is the key of the well-being of the public and social stability. Hence, it should be put on the list of problems that call for urgent solution at present as well as in the coming future. Moreover, the rural economic development cannot do without the promotion and support of rural finance.This paper gives a brief review of the history of rural finance in China:the initial stage of new China, the stage of Reform and Open-up,several political adjustments in the 1980s and 1990s, financial reform in 2003, rural financial reform in 2006 and so on. It also points out that the rural financial reform that started from Rural Credit Cooperatives is just the starting point.This paper describes the status quo of rural financial research home and abroad from several aspects in one chapter:the relationship between rural finance and economics, the direction of rural financial system, the analysis of supply and demand in financial market, financial fund price-positioning and so on. There have been a series of research achievements in this area which can guide the process of policy-making and social practices.Then, the author tries to give an overall description of the status quo of rural financial development through the combination of practical work and reference materials.This paper analyses rural financial supply and demand, finds out the deficiency of market supply and finally indicates the existing rural financial weakening service problem. For example, rural financial subjects are in short supply, financial products cannot effectively meet the need of Village, Agriculture, Farmer, financial institutions gradually cut down the investments of credit for agriculture, rural fund goes back to cities obviously and so on. With the financial supply and demand theory, this paper adopts both qualitative and quantitative research methods and mathematical models as well as static and dynamic methods to analyse existing problems from three aspects:nationalized banks are being removed and merged, Rural Credit Cooperative are hard to take on responsibility of main force, and farmers donot have mortgage. Through this analysis, we find out several reasons:our rural financial system is unreasonable, the system of financial institutions is imperfect, related policy support is scarce. Finally, this paper gives out suggestions about problems above. Overall, this paper describes rural financial development and status quo, emphasizes existing situations and reasons for supply deficiency and provides corresponding solutions or suggestions.

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CLC: > Economic > Fiscal, monetary > Finance, banking > China's financial,banking > Financial organizations, banks > Financial organizations in urban and rural areas
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