Study On Risk Management Of Rural Microcredit

As an important form of rural finance, rural microfinance is meaningful for thesupport of agricultural development, the solution of three dimensional rural issuesand the improvement of production and living conditions. However, it can be seenthat rural microfinance generally faces the higher credit risks, operational risks andenvironmental risks for some reasons as follows: first, agriculture has higher naturalrisks and marketing risks; second, farmers live poorly and have fewer mortgageproperty; third, the financial institutions with rural microfinance are not strong enoughto handle risks. No doubt, these risks have become the main bottleneck factors forthe further progress of rural microfinance. So it is a big problem for rural creditcooperative (RCC) that how to resolve and avoid the rural microfinance. Therefore,according to the conditions of RCC of Taonan city, some quantitative estimation,analysis on the causes and solutions will been given in this thesis based on thedefinition of financial risks, rural microfinance and the main sorts of risks, which issignificant for the normalized and scientific development of rural microfinance andthe faster and healthier development of RCC. Specifically some topics have beenanalyzed such as:1. Theoretical analysis about rural microfinance. In this part, some theoreticalstudies have been given as following: On one hand, concepts of financial risks andrural microfinance will be defined, on the other hand, according to the conditions ofChina, the risks of rural microfinance will been classified as credit risk, operationalrisk and environmental risk on the basis of analysis on the characters of ruralfinancial risks and rural microfinance.2. The evaluation on the rural microfinance risks of Taonan RCC. In second part,an indices system aim to rural microfinance risks estimation will be constructed andthe quantitative evaluation aim to the rural microfinance risks of18branchinstitutions of Taonan RCC will be given with Factors Analysis method.3. Factors analysis of rural microfinance risks of Taonan RCC. According to theresults of risks estimation, some factors lead to environmental risks, operational risks and credit risks will be analyzed based on the conditions of Taonan RCC ruralmicrofinance.4. Main conclusions and policy implications. Some solutions to resolve theenvironmental risks, operational risks and credit risks will be proposed based on theempirical conclusions.