Research On Micro-credit Risk Control Based On Micro-insurance

Micro-credit, as a new financial model, is developing and growing up in China's financial system. Because of its small account, short duration, higher interest rates, amortization and other characteristics, it has been widely recognized and followed by developing counties as an effective poverty relief method in the international community. Since the micro-credit model was introduced in China in the early 90's, it has played an important role in solving the problem of the shortage of rural financial resources and the loan for poor farmers.However, with the development of the micro-credit in China, the credit funds and the scale are increasing gradually, many civil societies and international non-governmental organizations join in the market and make it becomes poor in management. Many problems, such as the weak management of credit monitoring, non-standard credit procedures and the backward of avoiding risk method, leading to the risk of micro-credit was increasing.In order to prevent and reduce the risk of credit, ensure the sustainable development of micro-credit, the article summarized the successful experience in the world and combined with the surveys in Ningxia on the theory basis of economics and risk management, econometric analysis, use the research method of theory and empirical analysis to classify and evaluate risk factor faced in micro-credit While improving the existing credit risk management system based on the proposed micro-insurance into the credit risk. I expect the paper could give some advises or guidance for micro-credit agencies in risk prevention and help to the rural financial reform.This thesis presented an analysis on micro-credit risk control and risk precaution in the four aspects: review of financial risk theory, causes of credit risk, establishment of assessment and evaluation model as well as sample analysis in Ningxia, the main points and conclusions are as follows:Firstly, the micro-credit risk is the inevitable outcome of development of micro-credit. From the viewpoint of economic theory, it can be seen that the credit risk is inevitable because of the limited rationality of financial main body's and personal selfish in the market economy system. This is the reason why people had not been found out a very effectively methods of micro-credit risk management to reduce the frequency of credit risk and the capital loss until now, therefore, the cognition risk, research risk and control risk have long been a focus for the domestic and foreign experts to study.Secondly, the faultiness of internal administrative system and legal system and the out-of-control in external supervision are two factors that created the credit risk. Judging from the internal management, by reason of the property right vacancy, the internal management mechanism, the promoting system and the restraint mechanism in practice were not perfect that caused the micro-credit risk particularity. In the eyes of external management, the inappropriate macroeconomic regulation and control, the lower cognition identity risk of borrower, the government administrative intervention excessively and so on, which increased the credit risk.Third, on the basis of the micro-credit risk factors, a model of evaluation of micro-credit risk was established with multi-level Fuzzy Comprehensive Evaluation Method and Data Envelopment Analysis Method, which evaluate the effect of micro-credit risk management from the different point in farmers and micro-credit agencies. As the result, it is the most useful method to control and reduce the risk of credit.Finally, to solve the problem and issues in micro-credit risk, the paper provided the strategy and suggestion of micro-credit risk precaution in terms of the policy, technique and management in the point of risk factor. Through improving the laws and regulations of micro-credit operation, developing financing channel and improving the supervision system, introducing micro-insurance mechanisms, etc. to achieve the purposes of dispersion of credit risk transfer.