Research on the Development of Village and Township Banks in China
This paper, in both Chinese and English, presents an overview of the current development of the Village and Township Bank (VTB) market in China.
The paper highlights issues that prevent VTBs from reaching their full operating potential. VTBs are banking institutions established in rural areas. They provide financial services to promote the development of local agriculture and rural economy. Huge rural financial demand, abundant social capital, optimization of the rural financial environment and phase-in of supportive policies make it feasible to establish VTBs in China. There are, however, several obstacles to VTB development in China. They include:
- Slow progress of establishment;
- Distinctive differences in regional development;
- Lack of enthusiasm from some initiating banks;
- Need to strengthen public credibility;
- Backward information technology system;
- Few businesses and insufficient talent;
- High operational risks.
The paper lays out policy recommendations for government, and initiating banks and investors, to strengthen the development and operations of VTBs.
