Microcredit: Impact,Sustainability And Outreach

Microcredit is one of the greatest financial innovation In the 20th century, By the way of development of microcredit micro finance institution (referred to as MFI) faces the choice of ownership, management, incentives and sustainability because it has social task of alleviating poverty and commercial task of sustainability, so how to find the meeting point of alleviating poverty and sustainability, and how to provid financial services to poor people and farmers while maintain their operating sustainability and financial sustainability of MFI, are argumented in the academic community and all kinds of countries. In different states there are different answers, In India and Bolivia MFI have completed commercial and joint-stock reform,financed through issuing stock and bond, charged high interest rates and earned high profits, which is one kind of reform patterns. China's MFI is still based on the kind of non-governmental organizations (referred to as the NGO), but it has the poor sustainability, so the direction of China's reform is the combination of NGO, microcredit companies, rural banks, rural credit cooperatives,rural financial collaborating organization and the formal institution service down.This article attempts to study the impact, sustainability and outreach of the microcredit, firstly the study will confirm the positive impact of microfinance; secondly it will study the MFI on how to avoid credit risk, maintain sustainability, improve the repayment rate,choose ownership patterns and manage patterns, choose the incentives to meet their social and commercial dual tasks.This article also attempts to propose policy recommendations for the development and operation of our country's microcredit, and guide its practice, and furnishe the content of microcredit theory of China, which is the purpose and significance of this article.The first is the introduction, including the purpose, significance, method, content and innovation etc.of this article, the innovation is that the existing literatures in our country, mostly studied the characteristics of China's microcredit itself, but studied the relationship of microcredit and women's health, and sustainability scarcely, analyzed the data in these areas scarcely too. This paper will study the ownership, management and performance of microcredit, microcredit and women's health, mechanism about risk aversion on the base of a large amount of data; then try to conclude about characteristics and development direction of the ownership, management of microcredit; try to solve the issues including the low repayment rate, the lack of supporting non-financial services, innovation of credit pattern in our country; finally propose policy recommendations for the development of China's microcredit.The literature review part through the international research summary on microcredit answers such a question in the developed and developing financial market why the market needs microcredit. The results of the analysis are that microcredit addresses the poor people and farmers of lacking collateral and solves adverse selection and moral hazard leading to high costs, reduces borrowing costs of giving loans to the poor people and farmers.The study of the impact of microcredit is started with the comparative analysis of contribution of agriculture credit and rural microcredit to farmers 'welfare. Through cointegration and Granger causality test the result is that the income of farmers and agricultural loans do not exist a long-term and short-term relationship, but the microcredit is positively related to farmers 'welfare, which proved microcredit is a effective channel to delivery funds to rural financial market.Seventy percent of microcredit is given to the women in the international, which has profound impact to the women. This part will study the impact.The first analysis is the impact of microcredit to women in all aspects, and then the article focuses on analysis of microcredit and the health of women, their pathes according to the product theory are:economic aspect of the pathes; social aspect; psychological aspects; political aspect. Their pathes according to social exclusion theory are:microcredit can solve the economic exclusion, spatial exclusion, and cultural exclusion faced by poor women, which enables them to make healthy.The determinants of financial sustainability of MFI will start to study how to maintain the MFI's sustainability from the angle of theory.The first is analysis of factors affecting the financial sustainability using the model, then we will propose the MFI's development goals according to the determines:(1) to make the microcredit interest rate liberate; (2) to develop small-scale MFI; (3) cooperatives should provide microcredit with increasing the availability of non-financial services; (4) The Government should increase the subsidies to MFI.The empirical study of financial sustainability, from the perspective of the repayment rate we will continue to analyze sustainability. We will study the case of microcredit in Guangzhou for determiants of repayment rate in urban microcredit, which can be used to provide practical ideas and methods for MFI:(1) microcredit case should support the undergraduates to form undergraduates + unemployed workers mode; (2) want the borrowers to use the real estate mortgage firstly in the circumstance that the borrowers possess the real eatates; (3) Is re-employment training targeted and timely? (4) use the more mature methods that some MFIs have proved successfully that these methods improve the repayment rate in the international, including group lending, dynamic incentives, regular repayment and financial collateral and so on.The study of the outreach of microcredit is started by the innovation of risk avoiding mechanisms of microcredit. Through innovative mechanisms microcredit can give more loans to more poor people and farmers enhancing the outreach, In Guangdong province Yunan country three levels of risk aversion mechanisms of micro-credit are developed, including credit village, county credit system and financial alleviating poverty. The farmers, the poor households and small and medium enterprises are included in microcredit service system through avoiding the credit risk. Microcedit achieves the outreach.Fllowed by microfinance institutions incentives analysis, we study what form of incentives MFI should be used to promote outreach. Firstly we analyze the optimal incentives under asymmetric information, and analyze the special nature of MFI, ultimately we conclud that the best incentives mechanism MFI should be adopted is based on the proportion of the ability of people in borrowers, that is MFI will implement the incectives promoting outreach after ensuring its repayment rateFinally, MFI's ownership, management and performance analysis, we study the impact of MFI's ownership and management from strengthening outreach. The impact of ownership form to outreach is complex, any form of ownership has both the incentives and disincentives to outreach of microcredit, so the best form of ownership is coexistence of various forms. We will propose a variety of management factors, study their impacts to outreach,which can guide the practice of the MFI.