Research On Evaluation Of Credit For Farmers Based On Support Vector Machines

From2004to2015, the Central Committee has issued12No.1documents about"Agriculture, Countryside and Farmers”. Three rural issues are the important problemsneed to be solved in China’s socialist modernization construction. Along with ourcountry socialist market economic system gradually improving, the urbanizationconstruction speeding up, rural financial reform continuing to deepen and under theintensive push of the benefit farming policy, the rural financial system construction hasbecome the core of a new rural construction and the sustainable development of ruraleconomy. In2015, the No.1document emphasized that promoting the reform of therural financial system, and ensuring that agricultural loan proportion can’t be reduced.Farmers, as a group, are the largest, most widely distributed in rural financial customers,and their financial behaviors of the entire rural financial research are of greatsignificance. under the new situation, there is Rapid growth in income of farmers, thesource of income structure changing, highly mobile population, means of tradebecoming increasingly complex, the core of trust relationship based on blood has beeneroded further with the migration and division of family, which established on the"acquaintance society" in a relatively stable personal credit which is facing theprobability of collapse. Change of farmers’ characteristics under the new situation andthe transformation of the pattern of farmers’ credit will bring profound influence to thedevelopment of rural finance. However, because of its naturally high liquidity offarmers, living scattered, the survival of the vulnerability, lack of effective collateral,credit consciousness relatively weak, which make financial institutions face moreserious information asymmetry problem when provide credit support to farmers. As adirect result, many financial institutions are not willing to put money in the farmers;especially the poor farmers have no access to win formal financial institutions creditsupport.On the other hand, June2014, the social credit system construction plan outline(2014-2020) issued by the state council points out that strengthening the construction offinancial credit information system and perfecting the credit information records,integration could standardize the order of financial markets. Establishing credit systemfor different objects could improve the consciousness of honesty and the level of credit in the whole society. The improvement of the farmers’ credit evaluation system is animportant part of the social credit system construction. Only establishing and improvingthe farmers credit system, evaluating farmers credit level objectively could help China’ssocial credit system construction, and could effectively solve the rural credit market offarmers credit difficult problems which caused by asymmetric information, and couldstrengthen the farmers’ honest and trustworthy business philosophy, furthermore couldreally improve the rural credit environment, promote the healthy development of ruraleconomy in our country.Studies of farmer credit evaluation include three parts: establishing creditevaluation index system of farmers, constructing farmer credit evaluation model, newfarmer credit system construction. Establishing farmers’ credit evaluation index systemis based on farmers’ own development characteristics and borrowing behavior and tochoose including family characteristics, repayment ability, the repayment willingness,stability, the macro environment, the security situation and other influence factors offarmers’ credit level. Thus it forms a complete index system which can be used in theconstruction of farmers’ credit evaluation model. Farmers credit evaluation model isbased on the index system, to get objective and comprehensive farmers credit evaluationresult output. Farmer credit system construction refers to the construction of creditsystem on the basis of farmer credit evaluation according to the results of regionaldifferences, the credit information of Midwest farmers that is not comprehensive, etc.,Moreover, how to effectively improve the accuracy of the ratings and how tofundamentally improve the level of farmers credit, solve the farmers loans are thestarting points, and then develop a new type of farmers credit system based on that.This paper combines theory model and the application research, using "solve theproblem of agriculture information asymmetry in the credit markets, regulate theprocess of approving agricultural financial institutions, perfect the construction offarmers credit system" as the main line, to study the farmer credit evaluation. And thepaper’s main work and innovation point are the following several aspects:(1) This paper analyze the risk of moral hazard and adverse selection in farmers’credit markets firstly, which caused by asymmetric information. Then, explaining thesignificance of farmer credit evaluation from the perspective of economics and combingthe basic concept of farmer credit evaluation and the credit evaluation theory draw theoutline of the thought and steps of farmer credit evaluation. Through the multipleperspectives analysis of farmers credit behavior characteristics, and combined with Chinese family financial survey data (CHFS). Joining the farmer growth and innovationability as well as the index which reflects the stability of the farmers into the existingresearch make up the short board in design of the formal financial institutions creditevaluation index, and preliminary choose70index which influences the level of farmerscredit evaluation. It makes up for the formal financial institutions credit evaluationindex in the design of short board.(2) Using maximal information coefficient and maximal correlation analysismethods can distinguish nonlinear and non functional relation, this article studies thedegree of correlation between the evaluation index, to filter the index system, delete theexistence of redundant information and discriminate indicators with bad effect. Then,based on the principle of credit evaluation model--the maximum interval of supportvector machine, the use of method of margin influence analysis for the second time infiltering indicators, guarantees the generalization ability of support vector machineevaluation model. Under the premise of ensuring an effective classification, with fewerindexes reflecting most of the evaluation information, it effectively reduces the indexquantity of credit evaluation index system for farmers.(3) According to the current existence of rural regional difference in China, with anationwide data analysis for farmers based on Chinese family financial investigation(CHFS), the evaluation index system is then decided to consist of33、31and32indicators respectively for East, Middle and West district. And then analyzes the causesof regional differences, at the same time, the construction of credit evaluation indexsystem for farmers, the characteristics of household credit in rural areas and ahighly-supported5C criterion are compared and analyzed. In conclusion, theconstruction of farmers’ credit evaluation index system can reflect the characteristics ofthe farmers’ credit in China, which is also accord with the5C criterion.(4) In the evaluation model, the support vector machine method, belonging in thefield of data mining, which has a better classification performance for small sample data,is introduced in a research of farmer credit evaluation. From the default judgment, theprobability of default and the loss rate of default forecast, the evaluation model wereconstructed in three regions separately, giving a comprehensive evaluation of farmers’credit level and making up for the lack of existing research. To provide a more objectivebasis for financial institutions when they audit farmers’ applications of loan, caneffectively reduce the non-performing loan ratio of financial institutions relating to agriculture and improve the credit risk management level of agriculture related loans offinancial institutions.(5) By building farmers’ credit evaluation index system and evaluation model，around improving farmer credit evaluation system is proposed: Improving the selectionof indicators based on farmers’ credit characteristics, building index system separatelycombined with the regional characteristics, using three-dimensional evaluation,promoting the construction of integrity culture and establishing incentive mechanism.The above results, not only have certain reference significance in enrichingfarmers’ credit evaluation theories in China, but also provide practical value inpromoting the construction of Chinese social credit system, improving credit riskmanagement level of agricultural credit market, reducing the rate of bad loans of formalfinancial institutions in agriculture, solving difficult problems gradually for farmers ingaining loan, and promoting further development of consumption credit market in ruralareas in China.