Abstract:Based on the important research background on innovation of new rural financial institutions,this paper uses panel data from China’s 1694 counties (cities) between 2006 and 2010 to empirically study the relationship between rural banking market structure and generation of small and medium-size enterprises.The result shows that decreasing of rural banking concentration is conducive to the formation of small and medium-size enterprises.And with the development of rural finance,the decline of rural banking concentration accelerates the formation of small and medium-size enterprises.In order to promote the growth of China’s county economy,this paper puts forward several corresponding policy suggestions on how to reduce rural banking market concentration and promote the formation of small and medium-size enterprises.