Microfinance Model Of The Formal Financial Comparison

Microfinance has long been widely acknowledged and utilized as an effective way to alleviate poverty. Due to its flexible transact procedures as well as abundant space of potential profit, a large number of formal or informal financial institutions have opened microfinance business, which makes it evolve into a new highly-efficient financial tool.Nowadays China is in the process of building a rural financial system with multi-patterns and microfinance has become a useful avenue to satisfy the need of rural credit. However, the two big formal rural financial institutions, Rural Credit Cooperation and Postal Savings Bank of China have adopted different microfinance operation patterns which are welfare-oriented and institutionalism-oriented respectively.The essay was divided into four sections. In the first part, the researcher dealt with the development of microfinance at home and abroad as well as its status quo in China and pointed out that China's microfinance development is more formal and multi-pattern-oriented. Then, writer analyzed the supply-demand relationship in microfinance and proposed that the involvement of formal financial institutions is a feasible solution to the deficit in rural credit funds. The third section was devoted to a comparative analysis between the patterns of microfinance adopted by Rural Credit Cooperation and Postal Savings Bank of China. Based on this, it was asserted that the two patterns are welfare-oriented and institutionalism-oriented respectively. In the final part, on the basis of the data collected in the field survey, the researcher compared the operation performance of the two patterns and found out both the advantages and demerits of them, which led to the conclusion that the pattern adopted by Postal Savings Bank of China was more sustainable than that of Rural Credit Cooperation. Besides, some suggestions aiming to improve the situation were also put forward at the end of this section.