The Research On Insurance Supporting For Rural Credit

The difficulty in rural credit is rooted in the high risk of agricultural production and information asymmetry between credit bureaus. To solve this problem, corresponding measures or mechanism is needed. Insurance has relative advantages on scattering agricultural production and operation risks, promoting credit rating of rural economy, reducing transaction cost. Based on this, this article from the angle of information economics, to study on the relief of rural credit difficulty, analysis on agricultural production risks, easing credit insurance institutions and the inner mechanism of the asymmetric information between the borrowers, exploring ways to support rural credit insurance to develop, has strong theory value and practical significance.Paper first analyzes the present situation of the rural credit market in China, then concludes the high rural credit risk and severe credit rationing are the current main problems. These problems are caused by natural risks of agricultural production and operation, the bigger market risks, and the rural credit market information asymmetry. This paper presents the way through insurance support to solve the problems. Under this perspective, the paper describes insurable character of risk faced by rural credit demand subject and substitutability of collateral and guarantees by insurance products and put forward three goals of insurance supporting rural credit, scattering the risk of agriculture production and operation, reducing adverse selection in rural credit markets and the moral hazard of the rural credit market supervision cost.Aiming at insurance supporting rural credit, the paper model proved its feasibility through relative mode and reasoning. The main function of the insurance risk diversification is reflected in changing agricultural production risk of conduction pathways, so insurance stabling investment income level of rural borrowers is proved first, and then analyzed rural borrowers investment risk and its probability of default monotonically increasing relationship, Thus concluded insurance can reduce the probability of default of rural borrowers, then reduce credit risk. Insurance is introduced based on the classical model of adverse selection and credit rationing, investigating insurance amount and interest combined to recognize adverse selection effects, the results show that the insurance with the interest does recognize the adverse selection rural of borrowers to a certain extent. Based on traditional model of the credit market game, exam results both before and after the introduction of the insurance game, the paper concluded that in the long run, the insurance can indeed reduce the lending credit institution supervision costs to a certain extent. Therefore, insurance can reduce rural credit risk and ease rural credit rationing.After theory proof of insurance supporting rural credit, the paper analyses empirically the relationship between insurance and rural credit risk, credit rationing. The results showed that the amount of growth in agricultural insurance and rural credit risk presented bi-directional causal relationship, Agricultural insurance growth plays a positive part in reducing the risk of rural credit, which promotes the growth of agricultural insurance in turn; and the development of agricultural insurance has a significant impact on the promotion of agriculture credit growth. However, due to the imperfections of the entire rural insurance market, the positive effects of this are largely limited, and therefore great efforts must be made to improve the rural insurance market, especially in combination with rural credit rural insurance.Appropriate insurance operation mode is built as brace to realize the goal of insurance supporting rural credit. The paper analyzed several kinds of insurance operation modes supporting rural credit, combined with insurance supporting rural credit development status, analyzed from replicability and scalability, insurance technical level and sustainable development, the paper chalked up to commercial operations (GG-CO) mode supported by government is the optimized operation mode of insurance supporting rural credit in our country. This kind of mode is coordinated by working of government、business credit、insurance bureaus. It has flexibility of business mode, it also can get help from government policy and finance. It can reduce adverse selection and moral hazard due to information asymmetry, it also cover demand subject at best.In order to realize this optimal model in rural monetary in our country, this paper describes optimal insurance model from insurance system building and insurance product development respectively. The insurance regulatory institutions, insurance companies, reinsurance companies, insurance intermediaries and insurance Asset Management Co are the important content to support rural credit under the mode of GG-CO insurance agency system. All kinds of insurance agents should do their jobs, complete each other according to function to improve the development of rural credit. In insurance system construction, the paper analyzes the different modes of insurance institutions supporting rural credit, China should develop the policy agricultural insurance institutions, actively promote national insurance company establishing branches of agricultural insurance, create a mutual insurance company and regional or local professional agricultural insurance company, and absorb foreign investment in insurance companies. In development of insurance products, according to the need of rural credit insurance market in China, the paper gave function orientation and development principle of insurance products. On this basis, the paper puts forward ideas of the overall development of the insurance products, we should focus on the innovation of small amount of credit guarantee insurance products, develop a pledge high quality insurance products, improve the agricultural product security class of insurance products and coordinated development of the personal property security class of insurance products. In the mode of GG-CO, the government should keep policy continuity, provide support for finance, it also should guarantee market operation of supply subject to the maximum, avoiding the negative effects brought by means of administration. In addition to, insurance and credit agents must build the mechanism of sharing risk loss, avoiding adverse selection and moral hazard of credit bureaus. Insurance agents themselves need to complete mechanism of risk recognition and risks sharing in order to sharing risks to the maximum in time and space.Finally the paper gives suggestions from legal system, government support, the credit environment, insurance risk diversification mechanism, the rural social service system as well as personnel training, in order to enhance and accelerate the strength and pace of insurance supporting rural credit.