Research On China's Urban Microfinance

The poverty alleviation with credit policy is the important component of the anti-poverty theory. As a financial method, credit gives an impetus to economic growth and has an active effect on poverty alleviation. Microfinance is attracting more and more concerns of the developing countries. First, the aim customer of the microfinance is the poor people who are on the verge of the formal financial market. The formal financial institutions will refuse to give loans to the poor because of the profit motive as they face the question such as smaller amount of loans, larger risks, worse credit standing without mortgage, high management and dealing cost. Second, international experiences improve that subsidized loans policy adopted by the overwhelming majority of developing countries brought about the following questions: the leakage of the profit, grabbed by the rich and low rate of loan payment. Institutional microfinance adopts the rules of market economy and makes the institutions serving the poor sustainable in finance. The characteristics of small amount, short term and self-organization by the poor will exclude the rich automatically and assure the rate of loan payment.Now, our country is in the transition time from planned economy to market economy. There has been a group of poor people in city, majority of which are unload workers, because of the adjustment of economic structure and reformation of national enterprises. They are full of experience and ability with the ardor to carve out but unavailable to fund. The paper discuss the possibility of the microfinance for the urban poverty alleviation on the basis of analyzing the relations between credit and poverty alleviation and research the effects the urban microfinance with the reference to the successful experience of foreign microfinance and the effect of rural microfinance.The frame of the paper is: the international experience of microfinance; the actuality of urban poverty; the feasibility of the urban microfinance; the shortcomings of the urban microfinance; the way to develop the urban microfinance.