A Study On Poor Farmers About The Measure And Control Of Their Microcredit Financing Risk

The development of microfinance has nearly21years since the ruraldevelopment institute-Chinese academy of social sciences introducing it in1993. Atpresent, the studies mainly concentrated on how to control the risk of microfinance.The studies about the performance of poor peasant households financing difficulties,the causing factors of farmers’ financing difficulties, the formation of poor peasanthouseholds’ credit risk are very less. Microfinance has become the peasants’ mainchannel for financing in our country. Microfinance has very important significance forrural economic development and farmers’ living standards improving. In order tomake the microfinance providing funds to help farmers out of poverty and get richsustainablly, we must study how to assess the risk reasonably, so as to achieve the aimof controlling the risk effectively.According to the characteristics of the rural credit cooperatives, this paperidentify, evaluate and control the credit risk to make the sustainable development ofmicrofinance of rural credit cooperatives. This article launches the research fromseven levels. Firstly, this paper extracted appropriate viewpoints of credit riskmanagement of Microloan Company in theory from two perspectives of microfinancetheory and risk management theory through summarizing theoretical and empiricalresearch literatures. Secondly, we selected the typical samples in three provinces toanalyze the farmers’ financing status from the rural microfinance institutions on thebasis of the national general survey. It showed the difficulty of the poor peasanthouseholds to obtain formal financial resources. Thirdly, through the analysis offactors in macro and micro level which influenced farmers’ financing risking, it isconcluded that why the rural financial institutions are reluctant to loan to the poorpeasant households. Forth, we evaluate the credit risks of the poor peasant householdsby using the model of “Logit”. This model can be used to measure the financing risklevel of farmers’ loans in rural formal financial institutions. Fifth, analyze therelationship between the rural financial institutions and the poor peasant householdson the basis of the game theory-the prisoner’s dilemma to build the controlling mechanism which is composited by rural financial institutions, poor peasanthouseholds and the guarantee organization. This can enhance the trust between therural financial institutions and the poor peasant households. Finally, build the controlsystem of credit risk to improve the financing ability of poor peasant households.