The Reseach On Operating Efficiency And Influenceing Factors Of Microfinance Companies In Zhejiang Province

Micro-finance Company is a major innovation of China’s rural financial reform. It’s quite important to solve the financing problem of rural area and SMEs, as well as promoting private financing. In 2008, Zhejiang province has launched the experimental work of Micro-finance companies and established 342 companies in these six years It has become a beneficial supplement to the financial system in Zhejiang Province. However, in recent years, along with the continued emergence of new financial institutions and the imperfect system itself, Micro-finance Company has suffered a bottleneck. Competitive market pressed these company pursuits the high amount of the benefits of growth. Therefore, how to adjust the mode of operation and improve the operational efficiency in the new normal economic is the key problem.Based on the theory of Micro-finance and rural financial development, the author had investigated some Micro-finance Companies in Zhejiang Province and interviewed with the person in charge of the Zhejiang Financial Affairs Office and the association of Micro-finance Company. This paper explores the theoretical and practical background of the development of Micro-finance Company and discusses its recent operating conditions and features. After analyzing the sample companies’ efficiency and the factors affecting the efficiency through data envelopment analysis and Tobit regression model, it lays a comprehensive analysis on Micro-finance Company’s recent operating conditions. At last, this paper provides some suggestions on how to enhance their operating ability. It is worth mentioning that this paper studies in full consideration of the double development goals of Micro-finance Company:their financial benefits and social benefits.On the basis of DEA results, we find that the current efficiency in Zhejiang province is only at an average level. They still need to improve it in the future. At the same time, thanks to the strong private capital and strictly control from the promoter, Micro-finance Companies’scale efficiency is relatively high. But most companies still have problem from the unreasonable input. In addition, because of the economic development level and different private capital activity, different cities have various efficiency values. What’s more, through Tobit regression, this paper concludes that Micro-finance companies need to weigh between sustainable goal and the goal to support rural population. The higher the external financing proportion is the more beneficial to the development Micro-finance Companies and other financial institutions’competition inspires Micro-finance Companies continue to improve efficiency. The limitation from external financing scale goes against with the development of Micro-finance Companies. It needs to be loosened. At the same time, the companies’internal operation affects with efficiency directly. They should strengthen the cooperation with financial institutions and achieve mutual benefits.Above all, we draw the conclusion that the Micro-finance company in Zhejiang should take the initiative to adapt to the new norm. They should innovative its loan products, credit services and micro-finance technology. Furthermore, actively exploring financing channels and strengthening risk control are the third suggestions. Our study and conclusions may provide useful guidance to relevant governmental agencies on improving their policies and also to Micro-finance companies on how to operate with higher efficiency.