Research On The Sustainable Development Of The Rural Microfinance Institutions In China

Abstract:Since1970’s, microfinance’s value as a new development tool of rural financial market is well established. It leads to greater emphasis on the development sustainability for the rural microfinance institutions by the researchers, investors and the bankers all over the world. This paper presents an overview on the sustainable development of the rural microfinance institutions in China, which provides a fresh ideas for the sustainable development of rural microfinance institutions.The majority of the world’s poor live in rural areas. Yet most lack access to the range of financial services they need. The definitions,the key factors,the major mechanisms to achieve the development sustainability are analyzed. This paper also gives the best practice sharing about the sustainable development of the rural microfinance institutions among the global microfinance industry.Microfinance institutions seeking to work in rural areas of China face numerous constraints, such as poor infrastructure, dispersed demand, price and yield risks, and collateral limitations. In view of the characteristics of different types of rural financial insitutions, the analysis on China’s Non-profit rural microfinance institutions and the commercial rural microfinance institutions are also made.This paper develops a talor-made evaluation index system for China’s Non-profit rural microfinance institutions, and build up another evaluation index system for China’s commercial rural microfinance institutions from financial,customer, business and employee dimension.This paper builds up a measuring model via UTAHP Process to take the quantitative evaluation for the sustainable development capability of the Non Profit rural microfinance institutions in China.This paper makes the empirical analysis on China Foundation for Poverty Alleviation (CFPA) based on the data of2004-2012.A measuring model of the sustainable development capability for the commercial rural microfinance institutions based on fuzzy linguistic group decision-making method under incomplete information is also proposed, which describes appraisal information of decision makers by combining fuzzy linguistic scale with multi-attribute group decision-making method. For illustrating the validity of the proposed model,20Village and Township Banks(VTB) are taken as an example to empirical analysis.With the purpose to promote the credit service to the unbanked and the competition improvement on satisfying demand in the rural financial market,this paper also recommends how improve the sustainable development of the rural microfinance institutions in China,which includes the institution building, the overall effectiveness of rural finance market,and the favorable policy environment.