The Study On Microfinance Risk Management In Rural Areas Of Jilin Province

Microfinance was born in Bangladesh in the 1970s. It provides financial services for urban and rural low-income. Initially, it is aimed to eliminate poverty and development of agricultural production. Internationally, microcredit funds are mainly used for agricultural production and technology transformation through financial institutions or cooperative organizations. In the early 1990s, microfinance was introduced in China, and began his pilot in China's rural areas. It developed rapidly in China. By the end of 2010, our country has set up 395 village banks.Jilin province is a major agricultural province in our country. By the end of 2009, there are 27.3955 million people in Jilin province. Among them, there is the rural population 12.7882 million, about 46.7% per cent of the total population, so the agricultural population proportion is very large. Jilin province is an important grain production area in China. Currently, the province's grain output reaches 55 billion pounds, the highest reached 56.8 billion pounds. It bears the important mission of national food security. If Jilin agricultural development condition becomes bad, it can endanger the whole country.2007, the new rural microfinance institutions in Jilin province and gradually set up, including village banks, loan companies and the postal savings bank. Jilin province faces some problems in the development of microfinance, such as the information less electronic, narrow channels of funding, lack of stable and adequate sources of financing, risk management, credit risk management of science concept lags, less number of business people, these do not favor for healthy development the microfinance. Therefore, this article selects the Jilin province as the research object.The actual situation about microfinance loans in Jilin province is decentralized, large amount of loans business. It can't establish a sound rural credit system in a short period of time. Therefore, it is necessary to simply assessment, establishing microfinance credit scoring systems. This article starts from the emergence and development of micro-credit. Through the elaboration of microcredit operation mode in foreign countries, analysis the significance to microfinance risk in China. And then try to analysis microfinance's status and operations management in Jilin province to research the root causes of micro-credit risks in Jilin province. To reduce the risk of microcredit, to investigate the farmer is a necessary work. However, the actual situation of the rural microfinance in Jilin province is that there is large number of loans households and they are decentralized, but they can only get little loans, so the portfolio is large. Therefore, to establish a sound rural credit system is not a short period of time to complete. So, it is necessary to according to the situation to establish microcredit farmers credit scoring system. However, I was based on analysis of the default condition of farmers using logistic regression method. The loan officer can do credit scoring using the regression method as reference coupled with actual situation of the farmers. Then draw on the credit risk management methods, combined with the farmers' credit scoring system to find the way to quantify the risk if violations occur, credit institutions will withstand the loss.This article is divided into 6 parts. First part is the preface, mainly about the research background, purpose and meaning of this article, literature review about microfinance, as well as the basic framework of this article. The second part is about the overview of the theory. This section is divided into two blocks, one introduces the definition of micro-credit, characteristics, development status, and the other part introduces the credit risk, characteristics, and so on. This part of the discussion of the theory is prepared for later bedding. The second section deals with the micro-credit risk management model in foreign countries, since China's mainly under the influence of Bangladesh Bank, so the focus of this article is to introduce the Bangladesh model, and do a comparison of three kinds of risk management model. The third part of this article is to analyze the risk status of microfinance in Jilin province. In this section, it describes the development of microfinance in Jilin province, and the problems in microfinance in terms of risk management, then analysis of the origins of micro-credit risk in Jilin province. Credit risk is the main risk which microfinance is facing in Jilin province and the whole country. Therefore,Ⅳpart of this article is mainly for establishing credit scoring model about credit risk. This part describes produced and the development situation of credit scoring, and describes the method of credit scoring and the feasibility of credit scoring. PartⅤis the empirical analysis. Identify the significant influence factor of famer's default through the internal data. In partⅥ, based on the analysis of microfinance risk in Jilin province by this article, and combined with microfinance experience, suggests recommendations of microfinance risk management in Jilin province. The last part of the full text is the summary.This article also has many shortages, particularly with regard to selection of data and the establishment of the model. Because the material and related data is limited, the contents and methods of the study may be irregularities, which should be improved in further.