This paper studies the formal institutional arrangements currently in force in Chinese rural credit co-operatives (RCCs). In particular, it analyses the legal position of the RCCs, the regulations concerning property rights, the specific features of co-operatives, the disparity between formal supervisory institutional arrangements and the actual implementation process, as well as the arrangements for the self-regulatory system, all of which suffer major shortcomings. In order to promote the secure and healthy development of the RCCs while strictly controlling their operational risks, the author considers that the Chinese supervisory authorities should accelerate the establishment of a new regulatory framework, which should be based on the reappraisal of the existing regulatory framework and on RCCs' ongoing institutional reforms. To this end, the author discusses how to further the reform of property rights system of the RCCs, how to strengthen and improve the supervisory system on market access, business operations, the provision of assistance with regard to liquidity risks and withdrawal from the market, and how to clarify the relationship between supervisory authorities and the RCCs.
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