Reconstructing China's Rural financial System Research

Abstract

How to build an effective rural financial system is a challenge that each developing country has to face. As for China, which is a country where its population dominates many aspects of society, the rural financial problem is therefore more important. Deepening the rural financial system reform and perfecting rural financial service system are the important countermeasures to strengthen the position of agriculture as the foundation, increase farmers' income and promote the comprehensive development of economy, and it is the important link of the reform of the financial system in the new period as well. Determination of the model variables and selection of the data 1.1 Model variable selection and assumptions In order to measure the impact of the existing rural financial system on the rural economy, we select the per capita loan balance of the Rural Credit Cooperatives and the Agricultural Development Bank, together with the quantity related to less formal finance (the investment of township enterprises on fixed assets which is from other sources of funding), as the explanatory variables. For the convenience of comparison, we increase the per capita agricultural financial expenditure of the central government as an extra explanatory variable. For the related variables of rural economy, we choose the per capita net income of farmers as explanatory variables. 1.2 Selection and description of the model data (1) Farmers per capita net income Table 1 per capita net income of rural households (1996 to 2010) year Absolute number(Unit: RMB / person) index year Absolute number(Unit: RMB / person) index 1978 133.6 10