Analysis Of High Interest Rates In Microfinance In Rural Areas

In Rural financial markets, famers’difficulties in financing, rural loans, agricultural development is difficult to get an effective financial support, is a key obstacle to the development of the rural economy. Microfinance emerged in the1970s as well as the booming worldwide and brought hope to overcome the plight of the rural credit market. Microfinance has so far been disbursed for the world’s hundreds of millions of poor credit loans, and influenced countless rural population. But, at the same time effective way to expand the coverage of rural financial, microfinance interest rates has increasingly become the focus of attention. Policy of high interest rates, MFIs are basically executed, but the outside world view is not the same, however, the majority of people in microfinance institutions to their own development point of view, or to support the policy of high interest rates. With the unfolding of microfinance in Chinese rural areas, the interest rates become the question we have to face.As China’s market-oriented interest rate reform continues to move forward, the floating range of lending rates of financial institutions continue to be relaxed. Following the January1,2004to expand their loan interest rate floating range, the People’s Bank of China from October29,2004, financial institutions raised the benchmark deposit and lending rates, and further relaxation of the floating range of RMB lending rate. The lending rates of financial institutions (excluding urban and rural credit cooperatives), in principle, to set the upper limit, the loan interest rate to fall a constant amplitude, the minimum lending rate is0.9times the benchmark interest rate. Of a financial competitive environment is not yet perfect rural credit cooperatives, the lending rate is still in place the upper limit, the highest floating coefficient is2.3times the benchmark lending rate, the loan interest rate to fall a constant amplitude. Microfinance companies, the highest floating coefficient is4times of the benchmark lending rate.This paper which is for the domestic hot issues of the microfinance interest rates, analyzes the requirements of the market-oriented development under the new situation of high interest rate policy for microfinance and demonstrates the reasonableness of high interest rates in supporting agriculture. With the help of the rural financial theory and researches at home and abroad, this paper demonstrate a reasonable view of the high interest rates.