Research On Microcredit Companies’ Financing Means

According to the Guiding Opinions on Organizing Microcredit Companies (MCCs) Pilot Sites (CBRC,2008,No.23), MCCs are designed to be focused on providing credit services to rural borrowers and MSMEs, and adhering to a small and diversified business model. MCCs have been alleviating the pressure of microenterprise and farmers from financing difficulties, but they are also faced with the pressure of insufficient funds. Because of the current policy constraints, MCCs are limited to finance from Shareholder capital, donated funds and loans from no more than two banks. In recent years, under the push of government, MCCs are actively trying to expand the financing channels, innovative financing means and seek breakthrough. Research on financing means of MCCs, important to the development of MCCs,can accelerate financial system reform too.Based on the theory of financing means and its related theories,the paper introduces main financing means of MMCs to us and analysizes the factors influencing the financing means:the environments, capital structure and company governance, information asymmetry and so on. The main ideas in this paper include:The concept of financing means,financing channels and financing pattern are introduced in this paper,and they are in close relation by nature. Financing means explore the main methods of getting fund by economic bodies. MCCs can be invested or established by natural persons or other social organizations and MCCs can take the form of a limited liability company. The financing means of MCCs can be divided into two categories: means of equity and means of debt. The former mainly include retaining earnings.adding shares and trust funds etc, The latter include borrowing from banks, private debt and asset securitization etc. The development of financing means depend on not only the innovation of capital market, but also different forms of financing platforms.This paper introduced our country’s social-economic environment, financial environment, policy environment and business environment of MCCs. Based on the Guiding Opinions on Organizing Microcredit Company Pilot Sites, many local governments have released new policies to add financial channels and innovate financial means. This paper analyzes the adjustment of Microcredit company’s financial policies and local policies.From the microcosmic perspective, there are so many factors influencing the selection of financing means,such as capital structure, company governance profitability and other internal factors. Based on the survey on MCCs financing means of six provinces or citise such as Jiangsu, Shanghai and so on,this paper used the structural equation model (SEM) to empirically analyzed the factors that affect the selection mechanism of financing means. The empirical analysis shows that profitability, exterior competition environment and capital structure are important factors affecting the financing means.Registered capital, the shareholders distribution can change the choice in some way.From international perspective, in some countries and regions where Microcredit industy developed very well, the governers support Microfinancial Institutions by all kinds of policies. MFIs also make new financing means on capital markets, such as attracting venture investment, making asset securitization and so on.In the end, the paper discussed the disadvantages of the reseach and point out the direction in the future.