A Theoretical Think on Financial Problem of Chinese Rural Areas

Transaction costs and incomplete contracts result in failures of formal financial institutions and suppression of informal financial institutions.Chinese rural areas offer abundant financial residue because of industrial restraint.Those are the main reason why in Chinese rural areas there is an enormous financial gap which expands years by years.The rural finance and the rural economy can support each other to develop only by sufficiently exerting a government leading role and adopting a strategy of supply lead.