Research On Micro Finance Market Development In China

As a business mode applicable to the financial demands in rural areas, micro finance mainly isused to deal with financial demands featured small amount, scatter, short time, absence of mortgageand collateral, an effective manner to lift people out of poverty, and it is also a very important wayto construct a healthy and complete financial service system in rural area.The thesis proposes a fresh definition and theoretical basis of micro finance in China, andanalyze the feasibility and importance of financial coordination theory upon it. The author mainlydiscusses the supply and demand of micro finance in our country. From the perspective ofsupply-demand in rural finance, it summarize farmers’ financial demands and trends. As societydevelops, its demand to capitals diversifies; it also analyze the rural micro finance of traditionalfinancial organization, new rural financial organization, poverty support and non governmentalfunds, and shows the important role for our rural financial service system.By the analysis of micro finance supply demand in China, the thesis believes that the biggestproblem of micro finance in our country is the imbalance of supply and demand. The main causesafter analysis are: suppliers show not enough enthusiasm; capital is inadequate or narrow sourced;credit grading system and rural loaning regulations are not sound; suffered from high loaningthresholds and big pay risks, demanders’ loans are still very difficult. Plus the asymmetricinformation tends to adverse selection and moral risks. Therefore, to solve the harmful effects fromthe above factors to our micro finance, the thesis suggests every government and related departmentshould enhance benefiting and supporting rural areas, innovate risk compensation mechanism andpricing mechanism, formulate a better rural loan regulations; the Banking Regulatory Commissionshould improve its supervision and control, and provide more scientific supervision systems; foreach micro finance organization, a ceaseless innovative risk control mechanism, credit mechanismand service quality should be in place.