The Study On The Modes To Transfer Loans Of IFAD's Rural Financial Project In China

How to provide rural poor people with effective financing service to reduce financial constraints, is one of the important bottleneck problems that has to be resolved for the development of the rural economy, and has always been a severe challenge facing our government.Since 1980s, our government has endeavoured endlessly to promote the financial reform and development in the rural area.Some achievements have been made after years of reform. Nevertheless, there are still many problems in the course of financial reform in the rural area and the financial needs of the households are still not satisfied in a long run.Financial repression is still obvious in rural area, and no ultimate solution has been made to the difficulty in gaining access to loans for the majority of rural households, especially the poor. The introduction of IFAD's financial project, which operates through different ways to transfer loan, in China's rural area provides a new source and opportunity to resolve this problem.However, each model of transfers of loans has its own advantages and disadvantages. How to evaluate the models of transfers of loans, how to realize the sustainable development of the institutions for transferring loans and the loan coverage of rural people,and how to select different models to match different targeted groups to transfer loans are all important questions imminently needed to be resolvedThis study first describes the evolution of financing theory for rural area and the characteristics of microfinance model, and introduces the IFAD and the implementation situation of its rural financial program in China, and investigates the situation of demand meeting of household's loan in China through investigating actual loans of rural households.Second, based on this and combination of the survey data, this study introduces systematically the operational procedure of several models of transferring loans of IFAD's rural financial project in China. This study also assesses the fiscal models, the rural credit cooperative model, the women union model, and village development fund model of transferring loans from the perspectives of financial institutions and rural households.Then, we propose the need for reforming the models of transfers of loans. Finally, we apply the conclusion of the analysis into practice constructing the IFAD's rural financial project model of transferring loans that is suitable for China's situation, and provide suggestions regarding improvement of its external environment.The main conclusions of this research:First, the development and evolution of international rural financial theory has changed the role of the government in the rural financial market.Second, the evolution of rural financial theory also deeply influences the process of China's transitional rural financial system reform, resulting in the changing of the models of IFAD's project in China's rural area.Third, from the perspective of the supply side, IFAD, as a long-term international financial institution that supports the agricultural development in the poor area, changes and tests its patterns of transfers of loans, closely associating with China's rural financial system that carries out local tests, and sometimes even leading the way of China's rural financial system reform. In a sense the operation of these models can also be taken as the experimentation of China's rural financial system reform in some areas and hence provides valuable experience for the evolution and experimentation of China's rural financial system reform.Fourth, from the perspective of demand side, although China's rural financial system is deepening and the rural financial system has been gradually improved, the shortage of capital, technology and institutions are still prevalent in China, being the traditional agricultural country under the conditions of a small-scale peasant economy. The analysis of the supply behavior of China's formal financial institutions in rural areas, as well as analysis of the main objectives of IFAD's rural finance project, shows that farmers in our country have great demand for credit, but the shortage of financial supply is prevalent in all regions, which seriously inhibit the development of the rural economy, restricting the improvement of the lives of farmers.Fifth, although the transfers of loans by rural credit cooperatives, women union, and pilot village development fund ,the existing pattern of IFAD's rural finance project to transfer loans, have their own disadvantages, which need to be constantly improved, but after the performance analysis, these modes have their own distinct advantages in sustainable development, risk prevention, credit funds and institutions support, as well as the target groups reaching, which can guarantee the sustainable operation of the credit funds and the wide coverage of target groups.Sixth, the launching of microfinance credit by rural credit cooperatives is an important way to solve the long term contradictions in the commercial credit market in rural areas that rural households have difficulties in providing loan collateral, and therefore the rural credit cooperatives have difficulties in providing loan.Seventh, although the coverage of the microfinance credit of IFAD's rural finance project is constrained by the limitation of the credit funds, and is far from meeting the demand of households in the project area, but over a period of time in the future it has much room for development and remains an important source of credit funds for the poor farmers in central and western project area.Eighth, the credit modes, with the rural credit cooperatives model of transfers of loan as the main mode associating with the community-oriented, and closer to farmers'credit mode, is the product of the organic integration of IFAD's rural finance projects in China and China's rural financial system reform process over a period of time in future.Ninth, the providers of microfinance credit in rural areas support the poor farmers getting access to credit from the perspective of financial services, at the same time, they should not only treat supported target groups as economic persons rather than objects to provide relief, but also improve and coordinate the credit relations between them and farmers, changing purely loan transactions and customer relationships into mutually beneficial cooperation of win-win relationship.