Study On Interest Rate Pricing Issues Of Micro-credit

The international micro-credit has been developed for half a century, it is developing in most of the countries and regions around the world. There are successful experiences, but also failures. Thanks to the help of international organizations, NGO micro-credit begin to develop in China. GB model is a successful model on behalf of advanced experience of foreign countries.At present, domestic and foreign scholars start a discussion on the development of micro-credit around the level of lending rates and sustainable development issues in view of development of NGO micro-credit. The majority of scholars believe that low interest rate has brought malpractice. The main viewpoints: Low-income people can not get enough credit, low loan repayment rate and high default rate appear, and low interest rates can not cover the institutional costs. So some people believe that high interest rate helps low-income people to obtain loans, and these people can afford to pay the loans, not only the low interest rates can help low-income people. In response to these controversial issues, this paper gives some discussion on micro-credit interest rate pricing around the interest rate, taking institutions of irregular finance for instance. This discussion is divided into six parts.Part1, giving description of research background, research significance, and research status. Part2, summarizing the history of the development of domestic micro-credit and interest rate pricing status. Part3, giving analysis on micro-credit demander(farmers). Part4, giving analysis on micro-credit provider(micro-credit institution). Part5, searching for an equilibrium interest rate, a reasonable range of interest rate. Part6, giving some suggestions.Through analysis and study, this paper thinks that:From the demand side, the development level of domestic Institutions of irregular finance micro-credit is low, the focus is not the level of interest rates, but implement a reasonable interest rate and loan incentives to guide farmers to participate in microfinance effectively. Meanwhile, the high rate of return of agricultural production is not the verdict yet, it is can not prove whether farmers accept high interest rate loans. Agricultural profitability is very different from each agricultural products and various areas.From the supply side, institutions must solve their own costs problems and development problems firstly, then is how to better their service. Institutions should focus on pricing mechanisms and strategies, and performing flexible pricing. In the short term, it is necessary to target high-quality industries and customers, to guarantee a certain level of (not to be too low) interest rate can be implemented and help institutions to survive. In the long run, resolve cost and profit problems for institutions depends on the scale of development, as growing customer base and increase market share. Only the formation of a large organization can help lowering cost rate, improving profitability, and maintaining or lowering interest rates, then institutions achieve better customer service. Constructing and putting interest rate pricing model to use for micro-credit is difficult, and the utilization value is not high. Institutions of irregular finance micro-credit mainly uses international general formula to calculate interest rate, that is breakeven interest rate formula.In the current situation of the rural financial market and policy background, institutions of irregular finance need to change into village banks, rural cooperative banks, rural commercial banks, and other financial institutions, in order to address development bottlenecks and expand the scale.