China's rural financial problem

[Keywords] problem exists, finance, rural, China,

Rural finance is a worldwide problem, and this is because the rural finance its own characteristics, high cost, high risk, low income characteristics and commercial operation is required to achieve sustainable development of the contradiction between as a developing agricultural country, China a lot of the rural financial problems, considerable pressure. new century later, the government under continuous of seven support of three rural Document No. China's rural financial problems made great relief, but relative to the city's financial, rural finance is still the weak link of the entire financial system is still very backward, this article described some of the major issues for rural financial.

A rural formal financial the "initiative marginalized, to become the main force of non-formal financial

China's rural financial supply channels can be roughly divided into four categories, namely policy finance, commercial finance, cooperative finance and private finance. The four supply channels are mainly relying policy banks, commercial banks, rural credit cooperatives financial organizations and civil. now in the most rural areas, informal finance such as policy banks and commercial banks are showing initiative and the marginalization of the rural credit cooperatives the own organizational operations are not standardized, cooperative system more a mere formality, can not serve as the role of the main force, the highest interest rate, not strictly regulated private financial organizations to become the main supply channels in rural areas.

Rural formal financial the "initiative marginalized reasons

Economic suppression "economist Ronald McKinnon Edward Xiaoti,, theory, the so-called financial repression refers to a country's financial system is imperfect financial market mechanism is not perfect, there are too many financial control financial operation measures between financial and economic development in the mutual constraints double vicious circle backward state of financial repression resulting in inefficient use of capital, hinder and undermine the economic development of financial deepening and savings

There is a positive correlation between investment and economic growth of our country, our country due to long-standing macroeconomic policies of urbanization tendency agriculture often in less important areas, give way to the goal of industrialization and urbanization, even necessary make certain sacrifices, which makes especially in our rural financial repression phenomenon in our country, the government is in a very important position in the financial system in rural areas, although it is not the capital of the direct suppliers, but then the entire money supply and rural finance allocation have a significant impact on the capital supply of formal financial institutions due to the government's policy-oriented, making serious tendency of industrialization and urbanization, these institutions respond positively to government policies, reduction of funds to the "three rural" support to maximize their own interests. The central government default in a certain extent, this behavior of the formal financial institutions, formed informal institutions in rural areas "proactive marginalized.

Non-formal financial become the main force in the supply of rural financial reality of the helpless

Formal financial institutions in rural areas for rural declining supply of funds, the government in default this case, not the supply of rural financial propose practical way, so a variety of private financial institutions has become the main body of the rural financial supply.

The rural informal financing direct financing and indirect financing provided by the non-statutory financial organizations and farmers or between farmers and rural business owners, the informal financing solve farmers, township enterprise funds urgently needed to make up for the formal financial institutions the lack of availability of funds to accelerate the speed of the flow of funds, and is conducive to the development of the rural economy. Meanwhile, rural non-formal financial institutions the ability to resist risks, with strong investment, will interfere with the country's economic policy to a certain extent The implementation of disturbing social order, the lack of effective supervision, there are some negative effects. combined with various non-governmental financial institutions, while a certain extent, to meet their urgent needs, but its relatively high interest rates, is not conducive to long-term investment in fixed assets and expanded reproduction.

Farmers for a variety of private financial institutions is also a "love-hate relationship", but because of the formal financial institutions is not enough support for agriculture, so farmers have to use informal financing, which is the formal financial institutions marginalization negative impact.

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Second, the central government and local government decree is not uniform, support for agriculture had no significant effect

In China, the government is self-evident for the role of rural finance, government by the central government and local governments, both ability to coordinate, promote each other for the development of rural financial significance significant.

Since the reform and opening up, China for agricultural inputs basic pattern: the total increase in the proportion of decline, the central government in this pattern, it is impossible to agriculture directly operating activities lasting, significant investment, and our country to fiscal responsibility policy central government regional agriculture, investment in agriculture is more suited to local governments to do, the local government under the financial gains to maximize the objective function, due to the long cycle of investment in agriculture, the slow effect, it is not possible preference agricultural investment. So inconsistent in the objective function of the central government and local governments, a direct result of the support for agriculture effect is not significant.

Reasons for lack of central finance agricultural inputs

The central budget for investment in agriculture depends on the difference between the central fiscal revenue and the central demand of the non-agricultural financial expenditure, the shortfall is smaller, the less of the central budget for investment in agriculture, on the contrary the greater. After entering the new century, the central financial income and non-agricultural financial needs have been smaller, which makes the difference for the lack of investment in agriculture.

The reasons for lack of local government investment in agriculture

Local finance for investment in agriculture mainly depends on two aspects: one is the difference between the local financial revenue and non-agricultural financial expenditure, the shortfall is smaller, the less investment for agriculture, since the 1994 tax reform, and local revenues year after year increments, but of non-farm financial expenditure is growing rapidly, even more than the growth rate of fiscal revenue, which makes local finance for investment in agriculture are very few. agricultural investment in facilities that need to be carried out in accordance with the provisions of the local government, such as the before the local government to maximize financial gains, this part of the input will not be great. short, in this case the current, local financial support for agriculture is clearly inadequate, and even to some extent hindered the development of the rural economy.

Third, the rural financial regulatory system is not perfect, there is a regulatory vacuum

Overall, China's financial regulators are the totalitarian bulls regulatory mode, the China Banking Regulatory Commission, the Securities Regulatory Commission, China Insurance Regulatory Commission to carry out their duties, but in the rural financial regulation, it is difficult to say belongs to which mode is relatively chaotic situation such as the Central Bank and CBRC supervision of rural finance, when the cross in the regulatory area, but there is a regulatory vacuum, the central government and local governments for the management of rural financial double, this will be increased regulatory costs to some extent, can also cause management the confusion in the present case of separate supervision, the China Banking Regulatory Commission, China Insurance Regulatory Commission carry out their duties, but their regulatory bodies set only to the provincial level, the central bank can not exercise regulatory functions below the provincial regulatory body is basically a vacuum state information between central banks and regulatory agencies asymmetric coordination mechanism between the various regulatory bodies are not perfect, the various regulatory agencies fragmented financial regulatory efficiency is extremely low when financial institutions due to market risk or exit the market risk central banks and regulatory agencies in relief due to information asymmetry may cause salvage transition may also give financial regulators responsible person to provide the possibility of arbitrage.

In addition, due to the social transition, China is currently in the legislative work can not catch up with the pace of social and economic development, China's rural financial regulatory legislation lags behind, out of sync with the development of rural financial, which also form part of the vacuum, making the rural financial supervision part in marginalized and semi-marginalized status, which will undoubtedly increase the difficulty of rural financial supervision.


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[2] Guo Tian Yong, Guo Xiurui open economy, China's rural financial market game .2006.

[3] Zou sail, Li Mingxian. Rural finance .2005.

[4] Zhang Chunxia economic zone on the west side of the Straits of socialist new rural economic development research, 2006.

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