Study on Pattern of Operation of Rural Micro-Finance in China
|School||Ocean University of China|
|Keywords||China rural credit union Micro-finance Risk control Credit scoring|
For a long time, it is difficult for Chinese farmers to obtain loans from banks, which also find it hard to extend credit to farmers because of the farmers’decentralization, the limited portion of credit demand and the lack of mortgage and guarantee. With the reference to other nations’experience, the typical solution to the problem is to provide farmers with micro-finance. Born in Bangladesh in 1970s and introduced to China at the beginning of 1990s,micro-finance aims to offer financial services to the poor people and make positive influence on poverty relief. Besides governmental poverty alleviation organizations, china rural credit union has also run the business of rural micro-finance.With the practices of 9 years, the rural credit union of China that represents the general characteristics of the running pattern of micro-finance, has been developed into a mainstream one either from the quantities, influence or from the validity of framework. However, along with the development of micro-finance of rural credit union, the relative problems are more and more obvious, which badly influence the normal operation of micro-finance. Consequently, it’s necessary to study the pattern of micro-finance of rural credit union so as to exert its basic function of assisting farmers. This paper will research on what problems existing among the running of micro-finance of rural credit union and how to solve them efficiently.Based on an introduction of relevant theory about micro-finance, this paper will analyze current operation of this mode and explore the existing problems in order to design the applicable pattern of micro-finance provided by china rural credit union, using the foreign classic the said mode for reference.Chapter 1: Define the basic conception of rural micro-finance, and raise the theoretical foundation of micro-finance.Chapter 2: Current operation of china rural micro-finance. This chapter finds out the farmer’s demand for getting loans from rural credit union is hard to be satisfied, through the analysis of specific cases.Chapter 3: Analysis on the problems of micro-finance of rural credit union and the reason to it. From the points of rural credit union and farmer, these problems about credit risk control, management and financial products designing are mainly involved.Chapter 4:Successful oversea practices of micro-finance, which is representative and favorable will be well studied and drawn lessons from. After summarizing, the foreign experience reveals to us that the requirement of farmer can be met only by right credit risk management and innovating various products of micro-finance constantly.Chapter 5: Design and improvement of running mode of micro-finance. In this chapter, firstly, this paper will tentatively apply credit scoring model to rural micro-finance, meanwhile, establish dynamic incentives, implement information revelation and strengthen the effect of collateral substitute regarding“social asset”to ensure sustainability of micro-finance. Secondly, optimize various products of micro-finance so as to satisfy the farmer’s demand for loans and increase refund rate. Finally, carry out systems of rural loan broker actively in order to manage this kind of business efficiently.Chapter 6: Conclusions of this study and suggestions to improve the effective development of rural micro-finance from macro perspective.Through studying the patterns of operation of china rural micro-finance, the thesis analyzes the existent problems of the pattern of china credit union, consequently, the writer will have a try on designing the mode of its operation. The main contribution of this thesis can be described as follows, importing a quantitative method as credit scoring model to control the credit risk in micro-finance, using AHP method to make sure each index which evaluates credit of the farmer a weight and practicing system of information revelation, by which the costs of credit risk management can be decreased and the effect of collateral substitute regarding“social asset”ensuring sustainability of micro-finance. For insecure loan, the punishing effect from social asset is much better than that from the economic or juristical ones.