Research On The Microfinance Risk Management Of Farmers In China

In order to solve the credit constraint, Central Document No.1 proposed the establishment of natural person or corporate sponsored "microfinance institutions" for the first time in 2005. Since 2006, with the gradual openness of rural financial market, village banks, loan companies, rural fund cooperatives representing microfinance institutions greatly enriched rural financial system, and played an important role in solving the problems of rural banking: low network coverage, lack of financial services, and insufficient competition. However, due to the late start of China microfinance institutions, and lack of risk management technology and professional personnels, with the financial institutions and types of loans increased, non-performing load began to rise year by year, microfinance risks were higher and higher.Based on the this background, this paper summarized domestic and international microfinance risk management theory and methods, studied microfinance development and risk management status, designed a risk rating model, qualitatively analyzed factors that affect the microfinance risk, then using hierarchy analysis method, sorted the most influencing factors, finally established a risk rating model. According to empirical research results, based on game theory, constructed the theoretical model of credit contract secured by farmers’ professional cooperatives. Through the field investigation of "credit + insurance" strawberry planting loan projects of Changfeng county in An Hui Province, the results revealed a positive role of the projects in solving information asymmetry, reducing transaction costs and improving the bargaining position of farmers.The main conclusions are as follows: Microfinance institutions in China mainly face natural risk, market risk, credit risk, policy risk and operation risk; Single level sequencing results showed that household characteristics significantly affected microfinance risk. The level of total order result showed that farmer’s personal credit records, main business income ratio, debt guarantees and loan size significantly affected microfinance risk. Analysis of the theoretical model and field research showed that farmers’ professional cooperatives and joint guarantee mode played a positive role in reducing the rate of non-performing loans and improving farmers’ financial status.