Guarantee Funds for Inclusive Finance in China (Chinese Version)
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This paper, published by the Working Group on Inclusive Finance in China, and led by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Graduate School of The People's Bank of China, and World Microfinance Forum Geneva, reviews Credit Guarantee Funds (CGFs) in China.
CGFs are a popular instrument for promoting inclusive finance in developing countries. Many CGFs struggle to achieve sustainability, while some are successful in increasing access to credit. CGFs emerged in China in the early 1990s. The paper reviews their emergence, operational models, efficiency, regulation and supervision. Conclusions include:
- Regulators should define a framework that fosters healthy growth with sound risk control;
- Establishing provincial CGF federations could help to ease the pressure on local state supervisors;
- Donor agencies could assist in the development of a friendly and prudent regulatory framework for CGFs;
- Commercial investors should work in regions where SME development is diversified and booming;
- Donors should work with policy CGFs that embed some objectives of social development groups and commercial and mutual CGFs that demonstrate corporate social responsibility;
- KfW Bankengruppe (KfW) and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) should contribute their knowledge of credit guarantees.