The Problem Of Information Asymmetry In The Microfinance And Solutions

The global economy developed really fast recently, and more people can enjoy the outcome from this huge development. But there are still one sixth population live in the poor condition. They spread in Asia, South America, and Africa. They have become the outsider of the global economy boost. When the microfinance shows up, we finally started to think about how to bring them into our development.Microfinance began with 1970s. It is designed to face the poor, asking for no mortgage. The characteristics of small amount and high rate of the payment shined vividly in Asia and South America. This innovative pattern puts the financial services into the poor people and shows a new way for the bankers.However, at the time the microfinance has some features which make it has more risks than other traditional credit services, including the low education level of the borrowers, the big numbers of their needs, the high cost of credits, the lack of credit records, and the severe information asymmetry. As a financial service institution, the microfinance server should put their profit and continuing operating as their goals. But the information asymmetry problem can result in the end of credit contracts, even the shrink of microfinance market. So this article is focusing on the problem of information asymmetry in microfinance.The first chapter analyzed the development of microfinance in the universal level and in domestic environment, concluded the features of microfinance, and bought out the problem of information asymmetry. The second chapter used the theory of information asymmetry into microfinance market, and used mathematic methods to show that the problem will result in the shrink of micro credit market.The third and the forth chapter studied two different solutions of microfinance asymmetry. The third chapter analyzed the group joint credit mechanism and concluded the group joint credit is useful for the microfinance development. The fourth chapter analyzed the information marking system, and compared its strength and weakness. Accordingly this article studied problems in China's experience, and brought out several practical solutions to solve these problems.