Research On Microcredit Problems Of Harbin Bank

Micro-credit, for its small amount and high operating costs, once was a less competitive business for banks. However now it’s facing fierce competition.Currently the micro-credit market participants are not only the city commercial banks and rural credit cooperatives which are traditional micro-credit providers,but also national commercial banks, joint-stock commercial banks and other large banking institutions. In addition, small loan companies and P2 P loans online platforms, also joined the competition. In 2004, Harbin Bank advanced micro-credit as its bank-wide strategy. With almost ten years of development, it steadily increased the market share. However, faced with fierce competition as interest rate liberalization deepened and internet finance expanded, problems of Harbin Bank’s Micro-credit business came into light. This paper first reviews the related theoretical basis of micro-credit, including risk pricing, information asymmetries, credit rationing. Secondly, it analyzes the micro-credit problems of Harbin Bank which are the high collaterals requirement, high operating costs,long lending process and relatively low pricing competency, and analyzes the reasons of those four problems. Thirdly, this paper reviews the successful experience of Ant Finance and the United States Wells Fargo Bank in their operation of Micro-credit business. Lastly, by learning from their experience,this paper provides the solutions for the Harbin Bank’s micro-credit problems in aspects of improving the credit assessment ability, decreasing the operation costs,shortening the lending process, improving the risk pricing capacity and enhancing the comprehensive support for the micro-credit business.