Research On The Practical Effects Of Rural Micro-Credit Insurance Pilot

Since Reformation and Opening, with the rapid development of China’s economy, the gap between urban and rural areas has been widened and the issues of agriculture, farmer and rural area have been more prominent, which is characterized by financing difficulties of low-income households in rural areas. Although microcredit has been introduced into China to deal with the financing difficulties in rural areas, it did work effectively for the operational objectives of financial institutions, sustainable development, asking the institutions to ensure the safety of the loans. Meanwhile, owing to the low level of physical labor engaged in by low-income households, low wealth level, lack of the corresponding mortgage and guarantee, low-income households have no quality to obtain financing easily. At the same time, low-income households are been served by the for-profit commercial insurance companies and have not been covered totally by the policy insurance system. As a result, the low-income households not only cannot develop by obtain financing, but also face the huge risk threat. To them, the more impossibly they could obtain financing, and the huger the risk they face, the financial institutions are unwilling to offer loans to low-income households. It forms a vicious cycle, the poorer the poorer. Exactly at this moment, the appearance of micro-credit insurance solves this problem.Firstly, this thesis introduces the action mechanism of micro-credit insurance through the analysis of the definition and characteristics of micro-insurance and micro-credit insurance. The way of micro-credit insurance to deal with financing difficulties of low-income households is helping them obtain financing from financial institutions by reducing the risk of them. At present, micro-credit insurance has started to be done in China. In spite of different operation mode in various regions, the essence of them works through the way of combined with insurance and loan. In this thesis, it detailed analyzes the implementation status of the micro-credit insurance carried out in Sihong and finds that the introduction of micro-credit insurance has worked and solved some financing difficulties. However, the lack of government support, improper operation, low awareness to it by low-income households, and the product singleness restricted the development of micro-credit insurance. At last, Probit model is used to give a analysis of the practical effect of micro-credit insurance in Sihong.Based on the summarizing the whole thesis, we draw the following conclusions: micro-credit insurance is feasible under the present situation in China and has gotten some achievements; micro-credit insurance has some effect in solving the financing difficulties of low-income households; the Chinese low-income households’ demand of loans and the use ways of loans have changed. On this basis, this thesis puts forward some policy suggestions: the government should actively support the development of micro-credit insurance; insurance companies and financial institutions should strengthen the cooperation, do more propaganda and create the new products according to the demand of households.