The Research On Relationship Between Loan Struture Of Microfinance Companies And Sustainable Development

Microfinance was started from Grameen Bank of Bangladesh. Aiming to help people under poverty, and operate self-sustainability, it is now highly recognized by the international community. After it was introduced into China in 1990s, Zhejiang began the trails of microfinance companies all across the province in 2008.Microfinance companies in China, are a new financial mode of operation, and have many special characteristics. The investors of microfinance companies are diversified, deposits are not allowed, loan rates are flexible, products and services are innovative, service objects are usually "Three rural" and loan quotas are normally small. Those features suit the demand of rural finance market, especially in a province of battalion economy, like Zhejiang. As a result, the rapidly development of microfinance companies effectively improve the finance environment of rural areas, alleviate the problem of financing small and micro enterprises, and further activate the development of county economy. By the end of June.2014,the number of microfinance companies has reached to 342 in Zhejiang Province, and the number of employees has totaled to 3,850, loan amount has totaled to Y 91,935 million. Microfinance companies have already covered 12 cities and 97 counties of the whole province.However, affected by macroeconomics and illegal operations, the sustainable development circumstance for microfinance companies became increasingly severe. Problems i.e. narrow scope of business, insufficient ability of innovation, imperfect internal control, imperfect governance structure, blocked financing channels, lacking of micro-credit technologies, and other sustainable development issues accrued.The paper designed a questionnaire, given it to all microfinance companies of Zhejiang, and got 111 out of 342 answered. Using the data collected by questionnaires, the paper find that there are many differences between microfinance companies in the performance of sustainable development. And the structure of loan appears to be highly concentrated.In order to relating theories to practices, this paper starts from the theoretical analysis of provincial development status of microfinance companies. Meanwhile, based on field research and data acquisition, the paper will combine theory to practical data; use methods of case study and empirical analysis to in-depth analyze the relationship between loan structure and sustainable development of microfinance companies, and finally reach the conclusion that loan structure including borrowers, amounts and deadlines are highly important for sustainable development of microfinance companies while manners of loan is not so much important.At last, the paper offers useful sustainable development strategies and policy suggestions for microfinance companies to achieve operating and financial sustainable development. For microfinance companies, the paper advises them to:pay close attention to loan concentration; adjust loan term structure appropriately; monitor loan amount properly; devote them to service micro enterprises and "three rural", maintain a reasonable scale of assets and innovate loan manners actively. The paper also recommends policy-makers to establish incentive mechanism, and to allocate regulatory responsibilities. And trade associations shall guide the industry to improve its risk controls and market positioning, as well as direct and serves the development demand.