Study On Micro-finance Operation Mechanism Of International NGO In China

As economy is developing fast, the gap between cities and villages becomesbigeer and bigger. Cities develop fast, while villages develop more slowly. Povertyhas been a problem for many years in our country. Among many reasons occuring tothis phenomenon, an important one is a lack of finance in villages. Microfinance issuch a new finance form that lend money only to poor or people who have middle orlower level income. The earliest microfinance in China are initiated bynon-governmental organizations(NGOs),and since the1990s our country hasintroduced the Bangladesh microfinance model. NGO microfinance in solving ruralpoor’s production and life, economic development and so on has obtained a goodresult. NGO microfinance is considered to be an effective tool for poverty alleviation.In recent years, the development of China’s NGO microfinance encounters a lotof trouble.The number of NGO microfinance institutions has been from about300around2003to the present100or so, and the number of China’s NGO which can keepreal sustainable development is only50or so. Keeping sustainable development isbecoming the ultimate goal of each microfinance institution. Nowadays, commercialmicrofinance become the development trend of microfinance. Compared with thecommercial microfinance, although the scale of NGO microfinance in China is notvery big, and the quantity is small, it fills the vacancy because formal financialinstitutions fleed from the villages and make poor people lack of financial services.China’s laws and policies about microfinance encourage microfinance companies.However, China’s NGO microfinance institutions are faced with unknown legalidentiity, insufficient souce of funds, vulnerable sustainable development ability andproblems. This paper studies microfinance operatin michanism of internaitionalNGOs in China. By analyzing internal management system, operation system,operation mode, risk control and others aspects, and combining with case studies, thepaper offer suggestions for development of China’s NGO microfinance. This paper first theoretically analyzes microfinance financing mode,loan mode,operation process and system, risk control of international NGOs in China and someother aspects. It highlights two modes of international NGO microfinance operation inChina: group lending and community development fund. Secondly, it uses economicsto analyze microfinance operation conditions, the advantages and limitations of theoperation mechanism,and it demonstrates the principle of the operation mechanism.Finally, combining with two successful cases of microfinance operation ofinternational NGOs in China, it searately studies the application of two models ininternational NGOs microfinance.Through summarizing the characteristics ofmicrofinance operating mechanism of international NGOs in China, the paper putsforward the suggestions to the development of China’s NGOs microfinance.