Financial Innovation Of Sustainable Development Of Microfinance In Postal Savings Of China Zhejiang Branch

Microfinance, as a kind of innovative financial services, mainly provides small loans for customers who are rejected by the formal financial system. In recent years, it has been proven to be a universally valid means of solving the credit demand for various vulnerable groups (e.g. farmers, individual businesses, and small and micro businesses) in many countries. As China is in the critical period of economic development and social transformation, Microfinance is expected to grow at a more sustainable pace, emphasizing on developing more innovative ways for small loans.The problem that the rural areas could not get sufficient funds and finance service to support their development is known to be the key bottleneck for the sustainable and healthy development of China’s economic. The Microfinance services offered by the Postal Savings Bank of China (PSBC) play an important role in helping farmers, individual businesses, and small and micro businesses to alleviate the difficulties in getting loans. Thus, the study of further promoting the sustainable development of Microfinance services (in PSBC) possesses profound significance both in theory and practice.In this paper, we firstly summarize the state-of-the-art research on Microfinance in the literature.Based on the analysis of demand and supply of Microfinance in the critical period of economic development and social transformation,we find that the supply of financing from the formal financial system is seriously insufficient to meet the needs of farmers, individual businesses, and small and micro businesses. Then, taking the PSBC in Zhejiang province as an example, we analyse the innovations in concept, mechanism, product technology and risk control from the perspective of financial innovation during the sustainable development of Microfinance offered by the Postal Savings Bank of China. After all these, we come to brief conclusions, and also provide several suggestions on the development of Microfinance services in PSBC from both macro and micro perspectives.