Research On Sustainable Development Of Peasant Household Microfinance

Since the Rural Development Institute of the Chinese Academy of Social Sciences introduced the "microfinance" concept in the 1990s, the idea has become a consensus,which means that it's not only conducive to rural economic development,but also conducive to promoting the development of rural financial markets.Therefore, how to impel the peasant household microfinance to develop sustainably has been an important issue, in order to provide financial services in remote rural areas. It can help farmers increase income, make changes in the rural landscape,reduce the urban-rural gap, achieve common prosperity and build a socialist new countryside.This theme is "Research on Sustainable Development of peasant household microfinance". Starting from the theoretical basis of sustainable development of microfinance, this study discovered that there were some problems of peasant household microfinance through the research of the development status of peasant household microfinance in Fujian province. These problems include the serious constraints of formal credit, the much too high transaction costs, lack of collateral,and the high credit risk. Then it carried out an empirical analysis of influencing factors on peasant household microfinance based on the above-mentioned problems.From the peasant household's point of view,both the credit demand of farmer and the credit constraint relative to demand were examined by employing the empirical analysis model. According to the results of empirical analysis, this study found the main factors which affected the microfinance demands of farmers and that caused constraints to farmers for gaining access to formal credit (demand type). The results showed that: the credit demand of farmers were mainly to meet the needs of productive inputs and life consumption. Having the collateral/guarantee and obtaining credit lines were negatively impacting on the formal credit constraints which many peasant households suffered. In other words, both lacking collateral/guarantee and not having the credit lines would have a significant positive impact on the formal credit constraints. This showed that the lack of collateral/guarantee and credit lines were the most important factors that affected the sustainable development of the microfinance.Furthermore, it reflected a core issue is that the sustainable development of microfinance is faced with some problems including poor circulation of the elements of rural assets, imperfect financial service system in rural areas, and lack of enough service capacity. These problems need to be solved from the research angle of policy factor, legal factor, environmental factor and institutional factor, which are outside of the microfinance institutions.According to the empirical results, this study designed a framework system for evaluating the sustainable development capability of peasant household microfinance.The core of this evaluation system was considering both the microfinance institutions and their external factors which they were faced with in the region. Therefore, it can make a comprehensive evaluation of the capacity. Through the analysis of the internal and external factors, which is influencing the sustainable development of microfinance, this study introduced the hierarchical cluster analysis method for the determination of the weight of each indicator. Then an overall evaluation method of evaluating the sustainable development capability of peasant household microfinance in the region was constructed. This study focused on design models to evaluate sustainable development capacity of formal microfinance institutions and non-formal microfinance institutions.Finanlly, this study had found some problems based on the empirical results. For example, lots of peasant household had the credit demand, while they were lack of collateral/guarantee. Moreover, the circulation of the elements of rural assets was inefficient and the financial services in rural areas were insufficient. Therefore, this study chose to solve these problems from the research angle of policy, law,environment and institution. The focus was to optimize the regional policy system for advancing the sustainable development of peasant household microfinance. In this paper,the proposed reform and innovation path of sustainable development of peasant household microfinance in Fujian province was suggested. At the same time, the specific policy proposals were given. For example,it's necessary to confirm farmers'rights of their land, housing and other assets, to innovate the financial mechanism, to establishment and improve the "six rights" mortgage loan policy system for enhancing the work of peasant household microfinance, to innovative financial service system in rural areas and element trading system of rural assets, to promote the circulation of production element in rural areas, to strengthen credit system construction and to improve financial services capabilities in rural areas.This study researched the following areas innovatively. First, it established a comprehensive evaluation model for the sustainable development capacity of peasant household microfinance. The second was to propose a balanced development of business micro-credit and public-interest micro-credit, which was an improved sustainable development model of institutional micro-credit (mixed mode). Third, it tried to find the new path of policy system and market system for the sustainable development of peasant household microfinance.