Study, Based On The Theory Of Micro-credit System In Rural Areas Of Financial Exclusion

The issues concerning agriculture, countryside, and farmers have been watched closely by Chinese government. And the economy development is a breakthrough of the issues. Meanwhile, rural finance conducted as an agent of capital allocation in rural areas, which plays a crucial role in the process of economy development in countryside. After three stages of monetary system reform, China's rural financial has formed a supply system with specialization and cooperation, which contains policy-based finance, cooperative finance, and commercial finance. At present, the rural financial issues, such as difficulties of farmers and rural corporate finance, even the capital shortage of local governments, revealed a gap between supply and demand of rural finance and hardly incarnated the financial support.In theory, financial exclusion explained the isolation of the financial market in rural areas. The theory indicated that some disadvantaged could not enter the financial system and could not obtain the necessary and appropriate financial services for a variety of reasons. Meanwhile, microfinance, as an outcome of financial innovation, had gained a considerable achievement in providing poor people with financial services. Based on the financial exclusion theory and the present status of Chinese rural financial market, the paper would like to find out immanent cause of the imbalance between supply and demand in the market. Thus, based on the characteristics of microfinance system, the paper pointed out that the microfinance is a suitable approach to improve the imbalanced status in rural financial market and put forward some policy suggestions for the Chinese microfinance mechanism. The master paper is divided into four parts:The first chapter of the first part is"Introduction". It is the starting of the paper, which introduces the study background and meaning, and expounds the goal in research, method and the possible innovation. It has reviewed and referred to relevant theories of rural finance, finance exclusion and microfinance theory.The second chapter stated the present status and difficulties about rural finance. This part started from the supply and demand subjects of rural finance and their respective characteristics. We could draw a conclusion that the imbalance between supply and demand is the principal contradiction in the rural finance, which seriously hinder the development of rural economy.Chapter three aimed to indicate that financial exclusion is the reason of the imbalance between supply and demand of rural financial service. Financial exclusion provided the theory reference for present China's rural financial market.After that, the last part, Chapter four, is the core of the paper. It proposes that the microfinance is the suitable approach to mend the finance exclusion in Chinese rural financial market. Beginning with the successful practical experience of foreign microfinance mechanism, this part found out the characteristics including local knowledge paradigm and credit guarantees in groups would help us to improve the microfinance service in rural market at the present.