Innovation in the Security Mechanism of Guaranteed Loan Risk Based on Credit Community: A Case Study of the Pig Association's Guaranteed Loan in Shaxian County of Fujian

In the development of our country's rural finance, it is still severe that farmers to get loans. Lacking collateral or guarantee which financial institutions generally recognized and accepted is the biggest problem. So solving the farmer's loans problem is the focus of the rural financial work. Based on credit community, the association guarantee loan pattern, as a kind of finance innovation, solved contradiction between the high risk of the individual farmer and commercial bank's risk preference. The authors attempt to investigate the performance of the Pig Association's Guarantee Loan in ShaXian County of FuJian Province. This article suggests association guaranteed loans have four aspects advantage as follows: member's peer monitoring and constraint, mortgage asset handle, Loan loss compensation mechanism, and face-to-face society. So it can provide farmers with collateral meanwhile reduce the loan risk of the bank.