Innovation on Risk Management of Rural Microcredit in China-Case Study of Puyang Model

In the last three decades, China's microcredit mechanism in rural areas has developed rapidly. Risk management is a sensitive issue to all of the financial institutions including microcredit institutions. Many of the financial institutions do not accommodate microcredit due to the uncertainty o...

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Bibliographic Details
Published in:Advances in management (Indore, India) India), 2014-11, Vol.7 (11), p.1
Main Authors: Fengxia, Chang, Jiansheng, Wang, Zhiyu, Zhang
Format: Article
Language:English
Subjects:
Banking
Collateral
Cooperation
Cooperatives
Households
Innovations
Investigations
Liability
Microfinance
NGOs
Nongovernmental organizations
Pilot projects
Regulation of financial institutions
Risk management
Rural areas
Social capital
Studies
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Summary:In the last three decades, China's microcredit mechanism in rural areas has developed rapidly. Risk management is a sensitive issue to all of the financial institutions including microcredit institutions. Many of the financial institutions do not accommodate microcredit due to the uncertainty of recovering the interest including capital. Rural Credit Cooperatives of China (RCC) and other state-owned banking institutions do not want to conduct microcredit business because they cannot keep away from high risk Puyang Model created by The Rural Loan Cooperative of Puyang City, Henan Province, China made an innovation on risk management of rural microcredit and gained national-wide fame in China. The Rural Loan Cooperative of Puyang (RLC) has since become the largest NGO microcredit institution in China. This paper seeks to conduct an analysis of the innovative risk management practices devised in the Puyang model because it could provide positive implications for the development of microcredit that could be applied in all over China.
ISSN:0974-2611
2278-4551