Exploring the Relationship of Soft-risk-constraints and the Rural Corporative Funds under the Condition of Local Governmental Interventions

Using a conceptual framework called soft-risk-constraints, this article steps to analyze the Rural Corporative Funds, which has played the role of County or Town level banks at the local level .The author first discusses two structural conditions that lead to the situation of soft-risk-constraints, that are , the distribution of decision-making power, and channels of risk shifting.In the session regarding the distribution of decision-making power, via a careful analysis of the game of loan-provision and the related hierarchical game , the author points out the impossibility of it' s self-implementation of one of the most important institutional arrangements of Rural Corporative Funds, and examines the resulted relationship between the structures of decision-making power and responsibility , and the situation of soft-risk-constraints .In the session regarding the channels of risk shifting , the author has concluded three risk shifting channels that closely related with local governments' behavior.Finally , the author discusses several behavioral characteristics of the Rural Corporative Funds under the situation of soft-risk-constraints:its neglect toward lower rates of loan returning , and its impulsion of tolerating lower rates of reserve.The practical relevance of this article is its attention and examination of the development and filtering of variousfinancial organizations beyond the direct control of Central Government .

刘世定；

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