Reform of China's Rural Credit Unions : Policy Note

Reform of China's Rural Credit Unions : Policy Note

The reform of the Rural Credit Unions (RCUs) currently faces a number of major inter-related challenges. These must be resolved if China is to create a 'modern rural financial system'. The key issues facing policy-makers are: Consolidati...

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Bibliographic Details
Main Author:	World Bank
Format:	Policy Note
Language:	English en_US
Published:	Washington, DC 2013
Subjects:	ACCESS TO CREDIT ACCESS TO LOANS ACCOUNTING ACCOUNTING SERVICES ACCOUNTING SYSTEMS ADMINISTRATIVE CONTROLS AGRICULTURAL BANK AGRICULTURAL LOANS AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTS AUDITING BAD DEBTS BANKING SECTOR BANKING SERVICES BANKING SYSTEM BANKRUPTCY BANKS BOARDS OF DIRECTORS BORROWER BRANCH NETWORK CAPITAL ADEQUACY CAPITAL ADEQUACY RATIOS CAPITAL FLOWS CAPITAL INVESTMENT CASH PAYMENTS CENTRAL BANK COLLATERAL COLLATERAL FOR LOANS COMMERCIAL BANK COMMERCIAL BANKS COMMUNITY DEVELOPMENT COMPARATIVE ADVANTAGE COMPETITIVE CREDIT CONFLICT OF INTERESTS CONSOLIDATION CONTRACTUAL OBLIGATIONS COOPERATIVE BANKING COOPERATIVE BANKS COOPERATIVES CORPORATE GOVERNANCE COSTS TO BORROWERS CREDIT ASSESSMENT CREDIT BUREAUS CREDIT CARD CREDIT INFORMATION CREDIT INFORMATION SYSTEMS CREDIT SYSTEMS CREDIT UNIONS CROP FAILURE DEBTS DEPOSIT DEPOSIT INSURANCE DEPOSITORS DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT BANK DEVELOPMENT OF CREDIT BUREAUS DIRECT INVESTMENTS DIVERSIFICATION DIVIDENDS DONOR SUPPORT EARNINGS ECONOMIC ACTIVITIES ECONOMIC DEVELOPMENT ECONOMIC POLICIES EMPLOYEE EMPLOYMENT ENTRY THRESHOLD ENTRY THRESHOLDS ENVIRONMENTAL EXIT MECHANISM EXTERNAL SHOCKS FARMER FARMERS FINANCIAL DEVELOPMENT FINANCIAL EXPERTISE FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PERFORMANCE FINANCIAL REFORM FINANCIAL RISKS FINANCIAL SERVICE FINANCIAL SERVICE PROVIDER FINANCIAL SUPPORT FORMAL BANKING FORMAL BANKING SYSTEM FORMAL BANKS FUTURES GOVERNMENT BONDS GOVERNMENT FUNDING GOVERNMENT GUARANTEES GOVERNMENT INTERVENTION GOVERNMENT POLICIES GOVERNMENT POLICY GOVERNMENT SUBSIDIES GOVERNMENT SUPPORT GOVERNMENT SUPPORTS GROUP GUARANTEES GUARANTOR GUARANTORS HOUSEHOLDS HOUSING HUMAN RESOURCES INCENTIVE SYSTEMS INCOME TAX INFORMAL CREDIT INFORMAL RURAL FINANCE INFORMATION ASYMMETRY INFORMATION MANAGEMENT INSTITUTIONAL DEVELOPMENT INTEREST RATE INTEREST RATE CONTROLS INVESTING LACK OF COMPETITION LAWS LEGAL ENVIRONMENT LENDERS LOAN LOAN AGENTS LOAN APPLICATIONS LOAN DECISIONS LOAN DEFAULT LOAN GUARANTEES LOAN INSURANCE LOCAL ECONOMIES LOCAL ECONOMY LOCAL GOVERNMENTS LOCAL SAVINGS LONG-TERM INTEREST LOW INTEREST RATES MARKET DISCIPLINE MARKET ENTRY MARKET VALUE MICRO-CREDIT MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICRO-LOAN MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MICROFINANCE LOAN MIGRANT WORKERS MONETARY FUND MORAL HAZARDS MORTGAGE MORTGAGES NON-PERFORMING LOANS NPL OPPORTUNITY COST OPPORTUNITY COSTS OUTSTANDING LOANS POST OFFICE POST OFFICE SAVINGS POSTAL SAVINGS PREDATORY LENDING PRINCIPAL-AGENT PROBLEMS PRODUCERS PROFITABILITY PROPERTY RIGHTS PROVISION OF CREDIT RECAPITALIZATION REGULATOR REGULATORY AUTHORITIES REGULATORY FRAMEWORK REGULATORY SYSTEM REMITTANCE REMITTANCE SERVICES REMITTANCES RESERVE RETURN RISK CONTROLS RISK MANAGEMENT RISK MANAGEMENT SYSTEMS RURAL BRANCHES RURAL BUSINESS RURAL CLIENT RURAL COOPERATIVE BANKS RURAL CREDIT RURAL CREDIT COOPERATIVE RURAL CREDIT COOPERATIVES RURAL FINANCE RURAL FINANCIAL INSTITUTIONS RURAL FINANCIAL MARKET RURAL FINANCIAL MARKETS RURAL FINANCIAL SERVICES RURAL FINANCIAL SYSTEM RURAL LOANS RURAL MARKET SAVINGS BANK SHAREHOLDER SHAREHOLDERS SMALL BUSINESSES SMALL ENTERPRISES SMALL FARMER SMALL FARMERS SMALL LOANS SMART CARDS SOCIAL CAPITAL SOCIAL RESPONSIBILITY SOCIAL SECURITY SOCIAL WELFARE SOFT BUDGET CONSTRAINTS STATE BANKING STATE SUPPORT SUPERVISORY BOARD SUPERVISORY BOARDS SUSTAINABLE DEVELOPMENT TAX INCENTIVES TAX RELIEF TRADING TRADING SYSTEM TURNOVER URBAN ECONOMIES URBANIZATION VILLAGE VILLAGES WITHDRAWAL
Online Access:	http://documents.worldbank.org/curated/en/2009/06/16453093/china-reform-chinas-rural-credit-unions http://hdl.handle.net/10986/12719

Description
Summary:	The reform of the Rural Credit Unions (RCUs) currently faces a number of major inter-related challenges. These must be resolved if China is to create a 'modern rural financial system'. The key issues facing policy-makers are: Consolidating independent shareholder ownership in order to realize effective corporate governance and create sustainable commercial financial institutions; reshaping the relationship between provincial governments and the RCU system in order to bring to an end direct government administrative intervention in RCU management; preventing government subsidies and special policies, which are intended to ensure that RCUs meet policy goals to support the rural economy, from generating rent-seeking behavior and moral hazards that undermine commercial sustainability; and enabling the growth of a diverse range of rural financial institutions that would create competition and force greater efficiencies in rural financial markets. Policy reforms since 2003 have sought to address these issues, but they have yet to achieve their goal. The need for more change is widely recognized, and the authorities now have the opportunity to implement further reforms in order to create a flexible, diverse, efficient and responsive rural financial market that is both vibrant and disciplined.

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