Research on the Influencing Factots and Control of Rural Cooperative Financial Institution’s Credit Risk in Shaanxi Province
|School||Northwest University of Science and Technology|
|Keywords||Rural Cooperative Financial Institutions Credit Risk Rural Household Internal Control System External Environment|
“Three Rural” issues are a key link in the process of building a harmonious society anddeveloping our country into a well-off society, its seriousness and urgency has become acommon understanding for sectors of the society now. To advance agricultural modernizationsynchronously with the development of industrialization, information and urbanization is animportant mission for a long time. In the process, the support of rural finance will be neededin developing productive capacity of agriculture, realizing the transformation and upgrade ofagricultural, perfecting the system of the agricultural industry, promoting the development ofsecondary and tertiary rural industries. Rural Cooperative Financial Institutions areconsidered as the main supplier of the rural finance, their credit risk situation and abilities ofrisk control are not only the core competitiveness which deciding the increasing potential andprofit capacity of its credit operations and influencing the future development of RuralCooperative Financial Institutions, but also affecting the ability and willingness of ruralfinance supply. Research on the control of factors affecting credit risk of Rural CooperativeFinancial Institutions has significance on realizing their sustainable development, easing thesupply-type financial repression of rural financial market, and promoting agriculturalmodernization and benign interaction between rural finance and rural economy.Based on the above research background and current reform needs of Rural CooperativeFinancial Institutions, the thesis study on the control of factors affecting Shaanxi RuralCooperative Financial Institutions’ credit risk by using macroeconomics, institutionaleconomy, finance, risk management and so on to build an overall analytical framework whichinclude peasant households`credit default risk, internal control and external environment ofthe Rural Cooperative Financial Institutions. The dissertation chose the micro-risk as theresearch perspective, combining the first hand empirical data and statistical data, adopteddescriptive statistical analysis, analysis of variance, binary Logit regression model, panel datarandom effects model, analytic hierarchy process (AHP) and fuzzy comprehensive evaluationmethod, to analyze the control of credit risk of Rural Cooperative Financial Institutions,containing the effective factors of peasant households`credit default risk, the evaluation of the internal control system and the effects of external environment of Rural CooperativeFinancial Institution’s credit risk, on the basis, operational policy suggestions were putforward.In the review of above, the main contents are as follows:Chapter One: Introduce the background, the significance, the main methods and thepossible innovation of the dissertation.Chapter Two: Clarify some key definitions, analyze the elements of the credit riskcontrol of Rural Cooperative Financial Institutions, and a theory model was established toprovide theoretical basis for follow-up study.Chapter Three: Review the development of the credit risk control of Rural CooperativeFinancial Institutions in Shaanxi Province and demonstrate the problem and challenge in thisarea.Chapter Four: The factors affected the households’ default of credit are analyzed on thebasis of373households’ questionnaire data from Shaanxi Province by using the binary LogitRegression Model. On the basis of existing research, the management structure of thehouseholds’, the extent of subjective effort of repayment, households’ cognition which willindirectly reflect the default cost are included in the index system. The results show that thehead of the households’ education level、the number of labor working outside、households’income、they grow grains or not，they have a loan before or not, their lending practices andhouseholds’ subjective effort degree have significant effects on their credit default. Got theresults that the households’ management ability、households’ economic structure and thedesign of the credit products are the main points for their default of the credit. Also provedthat the Logit Regression Model is suitable for recognizing the household’ credit risk, RuralCooperative Financial Institution can use it to assess household’ credit. In addition, throughanalysis the difference of the peasant households’ credit default reasons, found that there is abig difference among the households’ with different characteristics.Chapter Five: On the bases of Analytic hierarchy process (AHP) method and fuzzycomprehensive evaluation method, taking the evaluation for credit risk internal control fromthe directors of Rural Cooperative Financial Institutions at or above the county level. Theperfect degree evaluation about the credit risk internal control system of Rural CooperativeFinancial Institutions was carried out vaguely. The results showed the perfect degree ofinternal control of the Rural Cooperative Financial Institutions’ credit risk is medium level,and has larger ascension space. Corporate governance structure and risk managementdepartment play an important role in internal control system. And that the degree of theperfection of the system control elements was the highest, and the process control elements was the worst, show that the credit risk internal control system is relatively sound; the entirerisk management concept has not yet been well penetrated in Rural Cooperative FinancialInstitutions’ credit risk control practice. And the small differences in scores between theelements show that Shaanxi Rural Cooperative Financial Institutions should take thecomprehensive risk management.Chapter Six: On the bases of random effects regression model of variable intercept,taking the basic situation of Rural Cooperative Financial Institutions from104counties inShaanxi Province during the period of2006-2010to assess the external influence factors ofcredit risk. We have found that: the increase of per capita net income of rural residents,financial support for agriculture, market share of agricultural loan and the smaller of the localgovernment fiscal deficit will decrease the rate of institution non-performing loansignificantly. Indicated that the rural economy development, the level of agricultural financialsubsidies has a positive influence on the credit risk control of Shaanxi Rural CooperativeFinancial Institutions’; the intervention of local government has impact the asset quality ofShaanxi Rural Cooperative Financial Institutions’ credit, but not yet constitute a great threat;Rural financial market competition has not yet been show incentive effect on the credit risk ofthe Shaanxi Rural Cooperative Financial Institutions.Chapter Seven: Based on the above research, summarize the policy suggestions onincreasing the service efficiency of households’ credit funds, reducing the households’ creditdefault risk; building a comprehensive risk management system, perfecting internal control ofcredit risk and optimizing the external environment of credit risk control.