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Microfinance Credit Risk Management Research Based on Score Model

Author: TangZhiPeng
Tutor: ZouHongYuan
School: Southwestern University of Finance and Economics
Course: Finance
Keywords: Microfinance Credit Risk Credit score Risk Management
CLC: F832.4
Type: Master's thesis
Year: 2011
Downloads: 315
Quote: 1
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Abstract

The international community is usually not or not fully enjoy the financial services for micro, small and medium-sized enterprises as well as provide financial services in low-and middle-income people is called Microfinance (Microfinance). Microfinance in China so far is usually only credit, only contains the Microcredit this part of the meaning in China is often translated as microfinance. Microfinance (Microcredit) based on personal or family as the core of a small amount of ongoing business loans, its main target, including individual industrial and commercial households, small workshop owners, property owners, micro, small and medium-sized enterprises as well as in low-income groups. Microcredit lending institutions in China, including rural commercial banks, city commercial banks, postal savings banks and other formal financial institutions, non-governmental organizations (NGOs), community-based organizations, government agencies, international organizations and other organizations also include professional microfinance companies. This paper focuses on the research object is similar internship of Fullerton the faithfulness Business Services Limited professional microfinance them to establish a reasonable concentration of private capital, regulate the private lending market, as well as effective solve individual industrial and commercial households, micro, small and medium-sized enterprise financing problem. Although the author focuses on research object is set up in urban areas, serve individual businesses, professional master of small workshops, small property owners, micro, small and medium-sized enterprises, and other non-agricultural economy microfinance company, but the introduction of microfinance is from the countries of the importance of rural issues and poverty alleviation, and gradually promote the development, and expand the success of the pilot rural by the introduction of the Grameen Bank (GB model). Since China's reform and opening up, the economy began to take off, however, compared with the rapid development of China's overall economic development of the secondary and tertiary industries surging primary industry was relatively slow. The majority of farmers generally believe that farm income is too low, so migrant workers to become one o'clock boom, but inside the city, the relative lack of supply of jobs, resulting in a large number of migrant workers unemployed. Is not optimistic, farmers' enthusiasm for production continued to decline, agricultural inputs continued to decline and lead to the wider migrant farmers to make a living, and the formation of a hard to break the vicious cycle; addition to this addition, our current implementation of the household contract responsibility system to promote the process of agricultural industrialization, China's agricultural products, however, face strong competition from large agricultural country in the international market, the market is not strong agricultural pattern of family production units, the income of the farmers is difficult to increase. To solve this problem, the introduction of micro-credit in the early 1990s. In the past two decades, the main forms of microfinance in China's government-led NGO, rural credit cooperatives and private voluntary funds from international donors, government expenditure, poor discount-interest payments, the central bank re-lending to support , private capital. In recent years, microfinance in the development of our country has made certain achievements. According to CBRC statistics show that as of the end of 2008, the National Rural Credit Cooperatives has issued 77,420,000 households microfinance accumulated 203.8 billion yuan and 135.1 billion yuan guaranteed loans to farmers to obtain loans accounted for 32.6% of the rural households. As of the end of 2009, China's total has been set up 1,334 microfinance companies, employing up to 14,574 people. Microfinance in China is introduced as a financial tool for poverty alleviation, but microfinance is not just for rural issues and poverty alleviation, it is from the start to helping the poor the most goals differentiation to the coexistence of multiple objectives, including Business sustainable the purposes and profitability requires a higher degree of service objectives of microfinance institutions inclined more and more to non-agricultural economy, especially for such as Fullerton Reliance Business Service Co., Ltd. professional microfinance companies, because they are usually set up in urban areas, but also because they have very clear goals of sustainability and profitability of the business requirements, so they serve more focused on individual industrial and commercial households, small workshop owners, property owners, micro-enterprises and even small and medium-sized enterprises. It kind of services beyond the reach of low-end customers for traditional financial institutions even provide poor service microfinance activities in the strict sense, is a very important aspect of building an inclusive financial system (inclusive financial system). Object due to the operational characteristics of the micro-credit and other services, the credit risk is usually higher than other loans, in addition, the conduct of business of microfinance institutions usually do not have the advanced credit risk management mechanism, the extent rely on the loan officer qualitative analysis, the resulting excessive lending problems caused due to the incentives of the loan officer, the problems caused by different levels due to the loan officer to determine standards are not uniform, and to maintain a considerable amount of the loan officer and unnecessary business costs . The existence of these problems, the microfinance credit risk management is necessary. If you can not effectively improve the level of micro-credit risk management, control of the non-performing loan rate of microfinance is bound to hinder the health of the microfinance, rapid and sustainable development. Therefore, the control of the risk of micro-credit, especially credit risk, reduce non-performing loans and improve credit quality has become a micro-credit lending institutions facing a very important task. Articles by generation of microfinance in China's development, as well as domestic and international microfinance combing of credit risk management, credit risk management models and ideas from qualitative analysis to quantitative analysis, from simple extrapolation trend to complex mathematical operations, however, the actual management of advanced theory there is a lag of many years, especially for the relatively backward management of small and medium-sized financial institutions, the relative lack of financial talent management relatively casual way. Conduct of business of microfinance institutions usually advanced credit risk management mechanism, the extent rely on the loan officer qualitative analysis, and resulting excessive lending problems caused due to the incentives of the loan officer, as well as the loan officer level caused by different criteria are not uniform, and to maintain a considerable amount of the loan officer and unnecessary business costs. In order to avoid these problems plagued microfinance institutions urgently need to be unified, accurate, objective and quantitative analysis to improve the existing credit risk assessment methodology. The introduction of the credit score, just to make up for the lack of expert scoring method exists objectively. After the introduction of credit scoring models, credit must be by credit scoring system for customer information score compared with the values ??obtained with the reference value to determine whether to lend or pricing of the loan, to avoid because of the pressure to perform and the relaxation of the conditions for approval are make credit decisions. , Fair, objective scoring model to avoid inconsistencies because of the uneven level of loan officers, credit decisions, and is conducive to the unity of the business and normative. In addition, the rapid and effective credit scoring models can reduce the number of staff and the workload of the credit, and help to improve lending efficiency and reduce the cost of business of microfinance institutions. Therefore, the introduction of credit scoring models for credit risk management of MFIs has important practical significance. Moreover, from a similar point of view, micro-credit and credit card business as well as personal loan business in many ways have a certain similarity: Customer large number of small, single amount, short-term loans, high transaction costs. All customer information will be used for credit scoring when customers apply for the credit loans from the grasp of the situation of the customer information, collected by the loan officer. The authenticity of the information from the customers point of view, the national personal credit system has improved, to help verify the authenticity of the customer information. In summary, the presence of credit scoring models for the microfinance credit risk assessment provides a scientific, objective, fair means conducive to to raise lending efficiency and reduce the cost of business of microfinance institutions, and introduced into the present, China The practice of microfinance credit risk assessment not only of great significance and has the theoretical feasibility. Selected based on the microfinance credit score summed up model index integrated operability, quantifiable and predictable principle, to learn Construction Bank Shanghai Branch personal loan business credit scoring method, the actual business of microfinance situation and the characteristics of the market, the flexibility to select a variety of model indicators, to build up the index system, using AHP to determine the rights of the various indicators in the index system in the design of credit scoring models, credit scoring models of their own design, the actual Case Study of internship in Fullerton the faithfulness Business Services Limited when personally encountered three cases can be seen through these three cases, the credit scoring models in practical work has a certain validity , combined with experience in credit risk management personnel to determine and comprehensive analysis taken together or can provide strong support for credit decisions. However, in some special cases, the scoring model will fail to make wrong judgments of credit risk, which requires constant correction and improvement of the model according to the actual situation and the real data, in order to improve the credit science and objectivity of ratings. Finally, the combination of text analysis, given a four-point policy recommendations on the microfinance credit risk management, including: sound credit files, to increase the quality of the information and information sharing. During the credit risk appraiser combination of quantitative and qualitative analysis. To regularly from time to time on the the microfinance credit risk scoring model to be dynamically adjusted to improve the overall quality of employees. Article topic ideas from the from the internship actual work found insufficient the microcredit credit risk, including loan officers incentives caused excessive lending problem, and the criteria are not caused by different levels due to the loan officer unified and maintain a considerable amount of the loan officer and unnecessary business costs, the introduction of credit scoring method in order to solve these practical problems. The inadequacies of this article is that the limited material master data is difficult to collect, in particular, very few non-performing loans of the data analysis process empirical analysis, this is where the need to further strengthen in the future. In addition, in view of the limited ability level, the paper will inevitably lead to biases, I would urge, experts and scholars to correct me.

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CLC: > Economic > Fiscal, monetary > Finance, banking > China's financial,banking > Credit
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