A Study On Sustainable Development Of Microfinance Institutions In Anhui Province

Microfinance is a kind of a financial business that developed out from the traditional formal financial system. From the narrow sense, microfinance refers to the provision of microfinance services for vulnerable groups; broadly speaking, any service or group that traditional financial institutions are not involved in belong to the microfinance. And MFIs refer to all institutions providing microfinance services. Only when the MFIs achieve sustainable development can they possibly provide long-term, ever-lasting and effective microfinance services. On the one hand, the development of MFIs will make up for the shortage of large financial institutions, and will improve the country's financial system. It is a need to establish a financial system that will bring benefit to the whole society. On the other hand, since the main target customers of MFIs are small micro-enterprises and agricultural enterprises, MFIs can ease the financing needs of small and micro enterprises and agricultural enterprises, and contribute to the development of small and micro enterprises, solving the Issues of agriculture, farmer and rural area and improving people's income level.MFIs in Anhui Province began to enter a period of rapid development from the reform of rural credit cooperatives in 2004, which exactly reflected by the rapid development of the banking corporation on MFIs, the new rural financial institutions and the expanding of financial coverage. However, the scale of most MFIs in Anhui is small and their profitability is relatively low. Obviously, how to maintain the sustainable development of MFIs in Anhui Province is an issue and challenge that have to be faced. This paper introduces the development status of Anhui microfinance and microfinance institutions and lists some of the major events in recent years on the development of micro-finance in order to grasp the direction of development policy and development institutions from a macro point of view. In addition, the author selected 14 rural commercial banks as representatives from all the rural commercial banks in Anhui Province and analyzed the capacity for sustainable development in Anhui MFIs. Considering the adequacy of the sample and to compare the difference in the capacity for sustainable development between Anhui MFIs and the microfinance institutions in other parts of China, this paper also selected 13 rural commercial banks from other provinces as the sample of a comparative analysis. Through empirical analysis of descriptive statistical analysis and factor analysis, the author analyzed the sustainability of microfinance institutions. The results shows that, among the sustainable development capacity of 27 rural commercial banks, Anhui Tongcheng Rural Commercial Bank ranks sixth, WUHU YANGZI Rural Commercial Bank ranks 11th and the rest of the rural commercial banks in Anhui rank relatively behind. It suggests that the capacity for sustainable development of Anhui MFIs is low, and there is still a gap between the capacity for sustainable development of MFIs in Anhui and that of the MFIs in other provinces.Finally, according to the results of empirical analysis, this paper puts some proposals to enhance the capacity for sustainable development in Anhui MFIs. First, it is to strengthen the top-level design, activating potential microfinance institutions; the second one is to apply scientific management system to improve the internal management of MFIs; third, it is to strengthen product innovation to enhance the external competitiveness of micro-finance institutions; the last is to reasonably layout to avoid blind competition.