Research On Microfinance Business Model And Credit Technology

China is experiencing its social and economical transforming. Unemployment in urban area and re-employment of farmers who lost their land during the urbanization become the most serious problem, which effects the sustainable development of economy and society. The center government addresses this issue in its No.1document from 2004 to 2006 and the issue of farmers is the focus of the new rural reconstruction. However it is still a challenge that to provide stable and formal finance services to low-income people in huge scale on an acceptable risk level. It is proved that commercially sustainable microfinance is an effective solution but it is also a problem to find proper business models and credit technology.With a view of finance bottleneck and financial restraint suffered by low-income people, this paper researches the concept, principle and theory, proves the microfinance has to comply with market displine. Based on the practice and experience of miocrofinance in foreign countries, the thesis analyses the statues of China microfinance development and points out the corresponding problem as well as its causes. Furtherpmore, the paper analyses mechanism and methodology of microfinance as a finance innovation. Main conclusions of this paper are as follows:1.Microfinance provides an effective way to solve the finance bottleneck for low-income people and the pre-condition of its success is market principle and innovation according to characteristics low-income clients. 2.Microfinance has become a commercially successful business with social purpose. 3.Chinese institutions need improve microfinance practice.4.Economic, social and cultural specialty of low-income people have to be considered during microfinanceinnovation. 5.Microfiance is the system innovation with the utilization of people's social asset. 6.Developement of credit technology has to aim at different market.Policy comments include: 1.Regulators need adjust related policy to build a friendly environment for development of microfinanc.2.Development banks should play a role to launch the microfinance market.3.Local finance institutions should be encouraged to provide microcredit services.4.Micofinance company and NGOs are suppose to be active player in an competitive market.