Research on Rural Credit Mode Innovation of Village Bank: a Case Study of Longnan Jinqiao Mode

As the new rural financial institutions,village banks are responsible for serving agriculture,countryside and farmers. However,in the actual operation,village banks' business appeared to deviate from agriculture,countryside and farmers. By describing the problems exist in agriculture loans of village banks and the process of loan service of "Jinqiao model",the paper summarizes two success factors of the mode include:on the one hand,in "Jinqiao model",endogenous loan officers were hired through the formation of two committees. The endogenous "quasi-loan officers" reduced the cost of information through their genetic and geographic advantages,and converted incentives from the traditional agency costs to expected benefits of the loan business; on the other hand,the "double group lending" in the "Jinqiao mode" strengthened the self-selection effect of the lending group and the defaults social punishment,so that the loss of financial institutions in the event of credit risk can be compensated.Finally,this paper put forward two suggestions:the traditional credit model requires indigenization transformation,including the indigenization of loan products and human resources; there should be a broad concept of targeting for the village banks,in other words,the performance of village banks should be affirmed as long as they do not leave rural areas and support countryside,agriculture and farmers with their own characteristics.