The Micro-credit Company Efficiency Study Under The Inclusive Finance Background

As an important way of helping the poor, microfinance has been quickly spread to many developing countries worldwide since the first successful operation in Bangladesh, and into China in the 1990s. In 2008, micro-credit company attempt started all over the country. Micro-credit companies are an important part in the construction of an inclusive financial system in China. They are functioning according to the service of the "policy of three Fs", as well as the social objectives and the continued pursuit of the financial objectives of the small and micro enterprises.The researches abroad on microfinance and micro-channel financial institutions started earlier, is currently focusing on the efficiency evaluation and the affective factors of the efficiency of microfinance institutions. Due to the late development of microfinance in China, the domestic research has been left behind. Moreover, the studies of the efficiency of micro-credit companies are not intensive and specific enough. As a result, the health and sustainable development of the micro-credit companies are prohibited. Therefore, the combination of China’s actual situation and its impact on the efficiency factor of micro-credit companies in the further research, would have important theoretical significance, as well as provide a theoretical reference for micro-cedit companies to improve their operational level. What’s more, it would assist the Government to formulate and improve relevant policies.Based on the collected data, this research analysis the development status of micro-credit companies in Shandong Province and summarized the relevant policy requirements for micro-credit companies in Shandong Province. Besides, starting from the business profiles, the sub-regions status and features were compared. Next, from the sustainability and outreach angle, the evaluation of the sustained efficiency, outreach efficiency as well as the comprehensive efficiency including financial sustainability objectives and social objectives is conducted using the DEA model. Meanwhile, the analyses of the factors that may affect the overall efficiency of micro-credit companies are conducted with the application of Tobit regression model. Finally, some policy recommendations based on the results of theoretical and empirical analysis are proposed in this research.Studies suggest that, in order to improve the overall efficiency of the micro-credit companies, they should first improve the overall quality of the employees, especially for strengthen the training of the loan officers. Secondly, strengthen their management capacity, finding use in "small volume "," fragmented "loan lending techniques to allocate the available resources more rationally. Thirdly, try to expand its asset size within the allowable range of policies and regulations, while an appropriate increase in loan interest rates can also be done. For policy makers, they should further untie the restrictions on sources of micro-credit companies’ funding. They should increase its support for microfinance while strengthen the surveillance as well. They should also clearly define the nature of the micro-credit company as soon as possible by the development of relevant laws and regulations.Innovations are mainly as follows:(1) based on the dual objectives of financial sustainability and outreach, this research makes overall evaluation for the efficiency of the micro-credit companies in Shandong Province. From background of building inclusive financial system, this paper studies the micro-credit company efficiency evaluation methods and efficiency determinants combining with the dual objectives. The samples and data are collected from first-hand information during the year of 2013, with a strong timeliness. (2) With the DEA and Tobit regression model, analyze the impact of factors such as the average interest rate for company efficiency. DEA analysis method is mainly used for banking financial institutions in the past, and rarely used to analyze the efficiency of micro-credit companies. Using DEA method has obvious advantages than other methods since this paper is in a situation of considering more input, more output. And on the analysis of efficiency determinants, selecting Tobit regression model can solve the inconsistency problem when directly using OLS model to estimate the generated efficiency values in DEA method.Ideally, the analyses and conclusions in this paper regarding the efficiency influencing factors of the micro-credit companies should be able to guide the relevant government departments to provide scientific and efficient policy operation for the efficiency development of the micro-credit companies.