An empirical study of rural microcredit in China

As a financial service, microcredit has solved the long-lasting problem that the formal financial institutions cannot provide a valid and effective way for the poor people to satisfy their financial demand. In this paper, an empirical study was made with the statistics data of Qingdao in China to measure the implementation of microcredit. Multiple linear regression models are established on both total agricultural output and incomes of farmers, and optimize them by Stepwise regression. Through comparative analysis, the models were further improved, which take lag phase into consideration. Then solution was reached, that is microcredit has a positive effect on agricultural output in the short term, but a negative role for per capita income of farmers; While in the long term, microcredit plays significant positive role to farmers´ per capita income.