Microcredit And Its Research In China

Since 1976 microcredit was first created by Dr. Muhammad Yunus in Bangladesh, it became a thriving business in the developing countries. It is also a miracle to reduce poverty in the financial area. In China, microcredit has a ten-year history, but it's not so prosperous. The reason is still complicated. We tried to imitate GrameenBank model at the beginning, but practically, it proves that we should innovate a new way to develop Chinese microcredit instead of copy GB model. This paper first introduces the origin of microcredit, the reason why it was created, the common international microcredit models and the basic needs and conditions to operate it; analyze the operation ways of GB which was created by Yunus, especially, after 1990's GB allows committees to hold shares and find creditable fund in business resources, and keep GB sustainable. The success of GB is so meaningful for China and other developing countries. Recently in China, a way to operate microcredit is to search overseas donation or government poverty alleviation funds—project operation—receive continuous donation. This paper focuses an important case of this model that is "Qin Ba Poverty Alleviation Project", including project background, plan, and design, thus, systematic innovation; analyze the localizing and standardizing concept of the Chinese situation. However, it is so regretful that this project did not meet its expectation, but still, it provides many cherishing experiences in systematic innovation. Since the beginning of 90s, GB model was introduced to China by Chinese microcredit entrepreneurs. During more than ten years development, our microcredit projects and organizations have our own characters. It's related to the support of International organizations, which play an important role and make a huge contribution in the growing up process of Chinese microcredit. Apart from that, we have our own made microcredit trials in China. One of these trial microcredit is the "Long Shui Tou village Mutual Help Fund" created by a famous economist Mao Yushi. "Mutual Help Fund" makes a great process on poverty reduction. However, on the effect of interest rate control and no legal position, it is not a sustainable microcredit model. On the practical basis, this paper summarizes the features of Chinese successful microcredt. Our microcredit is still limited to poverty alleviation, which leads to some problems during imitating GB model, including lack of beneficial policies for development, microcredit institution and employees are severely related to local government, the only GB model we could learn from, no other models, and rely on overseas donation to get financial support. Facing these problems, this paper provides some policy suggestions. The most successful experience proves that innovation rather than imitation is useful. It's necessary for microcredit to develop itself in beneficial management structure and supervision environment, and build sustainable business model, move the terminal clients of the present financial institution and products to the poor and low—income groups, design the frame work of financial development for microcredit, and make it become a new branch of commercial bank system. It is a positive way for microcredit to operate in China.