Abstract: Based on the data of 2018 counties in China, this paper analyzes the problem of financial exclusion facing by the counties since the market-oriented reform of the rural financial system. Empirical studies show that the problem of financial exclusion still exists in the counties, and mainly for the exclusion of credit funds, rather than the exclusion of traditional financial institutions. Further analysis show that the counties facing a "market failure" issue that exclusion of credit funds and relative saturation of institutions exist at the same time, which means that the increase in the supply of traditional financial institutions will not provide credit funds to solve the issues concerning agriculture, rural areas and peasantry and to support the development of county economy, but which exacerbated the outflow of county funds. These conclusions have important implications for the development of inclusive finance in China.

Key words: Financial Exclusion, Credit Funds, Saturated Institution