A Study On The Legal Incentive Mechanism Of Rural Microfinance

After the reform and opening up, great changes have taken place in the rural areas of china, there is no denying that, the problem of agriculture, rural and farmers is still grim. In fact, there are many ways to solve the problem, optimizing the rural financial ecology is the best choice for now. After years of practice and development, microfinance has been proved as the most important innovation in rural finance, and is also known as the best benefits anti-poverty tool in the world. After 30 years of trial and promotion, we have obtained a great achievement. Because of lacking the legal incentive mechanism, the sustainable development of microfinance is suffering a severe bottleneck.Based on these considerations, This thesis analyses the legal quagmire which restrict the development of microfinance, reference the successful experience of other countries, then put forward some suggestions on perfecting the legal incentive mechanism of microfinance. In order to create a good legal environment for the development of rural microfinance.This thesis is divided into four parts:The part one is the overview of rural microfinance. Expound the basic theory of microfinance at first, introduced the concept and value of microfinance. Then clarified the legal incentive mechanism. Finally introduced the situation of rural credit supply and the development status of microfinance in China.Part two analyzed the situation of legal incentive mechanism in china. Firstly, introduced the legislative status quo of microfinance. Then based on the existing laws and regulations, analysed the legal quagmire which restrict the development of rural microfinance. Pointed out that there are some legal problems with the development of microfinance.Part three introduced some successful experience of microfinance. Analysed the legal incentive mechanism of Bangladesh and Indonesia to provide experience for establishing legal incentive mechanism of microfinance in china.Part four put forward the idea for perfecting the legal incentive mechanism in china. Firstly, clarify the functions of the government, microfinance is an important part for the development of rural, the government has the duty to support the development of microfinance. Secondly, clarify the legal status of MFIS. Thirdly, perfect the market operation mechanism for microfinance, expand the autonomy of MFIS. Fourthly, perfect the legal system of rural credit guarantee, reduce risk and improve the financial chance for farmers. Lastly, perfect the oversight system to promote the healthy development of microfinance.This thesis found that:(1) There is a serious problem of information asymmetry in rural credit market, due to the profit-driven, credit institutions always avoid rural market. Although agricultural loans increased year by year, the proportion is still so small, the needs of credit is difficult to meet and the problem of credit supply in rural areas is still serious.(2) The shortage of legal incentive mechanism has become the biggest obstacle for the development of microfinance. Lacking the basic law of microfinance, lead to the problem of support measures failed, weak supervision, market operation mechanism and credit guarantee system is not sound.(3) The current legal system which exclude private capital, violated the objective of market, affected the enthusiasm of the folk capital, and limited the ability of financing and sustainable development of microfinance. Based on these considerations, this paper argues that we should solve the asymmetric information perspective, perfecting the legal incentive mechanism of microfinance.(1) Improving the system of government support, microfinance belongs to quasi-public products, totally dependent on the market will lead to "market failure", the government should support the development of microfinance through fiscal and taxation.(2) Create a health environment and improve the market operation mechanism for microfinance. Following the market rules, give MFIs greater independent jurisdiction, let it operate independently and freely in the rural credit market.(3) Improving the rural credit guarantee system, develope agricultural insurance,balance the problem of asymmetric information, reduce the credit risk, improve the availability of credit for farmers.