Research On Credit Risk Management Of Microloan Company

With the pilot of seven microloan companies have achieved certain suceess and actively promoted by local governments, microloan companies have set up and in operation formally in China, became a new way of micro finance with Chinese identity that adapting to "the issues of agriculture, farmer and rural area" and characteristics of SMEs in rural areas. In May2008, People’s Bank of China and Banking Regulatory Commission issued’the pilot guidance of microloan company’jointly, to encourage and regulate the development of microloan company. Being a new commercial microfinance organization, with its rapid development, credit risk management issue of microloan company became prominent increasingly, affecting sustainable development of institutions and stability of rural financial market seriously. In this context, credit risk management of microloan company is significance practically.Different financial institutions face the same credit risk in market economy, but the characteristics and causes of credit risk are different. In order to implement effective credit risk management, different financial institutions should integrate institutional characteristics, special nature of credit risk and operational characteristics into the general framework of credit risk management.This paper is proceeded as the following five levels hierarchically:Firstly, from two perspectives of relationship banking theory and soft information theory, summarized theoretical and empirical research literatures, extracted appropriate viewpoints of credit risk management of microloan company in theory. Secondly, dissected the special nature and causes of credit risk of microloan company in three aspects, which is principal defects, object defects and external factors. Based on comparative analysis of microloan companies, commercial bank and new rural financial institutions in institutional characteristics and credit risk management features, conducted credit risk management framework of microloan company. Again, with reference to the existing indicators and methods of credit risk evaluation in developing and developed microcredit, probed the applicability into microloan company, and expanded a empirical test. Fourthly, designed a credit risk early warning operational processes of microloan company, selected proper evaluation method to determine the situation of credit risk, and to case study following. Finally, based on the above theoretical and empirical analysis, put forward series measures of credit risk control.With the introduction of game theory, conducted a game model to analyze the nature of lending relationship betweeen microloan company and customer in the case of single game with perfect information, repeated dynamic game with perfect information and incomplete information in rural credit market, revealing the special nature of credit risk and its underlying causes further.Based on the existing credit risk evaluation indicators of microloan, determined credit risk evaluation indicators of microloan company in three dimensions------customer feature dimension, loan feature dimension and relationship feature dimension. With series of field researches, open interviews and questionnaires, obtaining first-hand survey data and secondary sources of credit file, grounded on the subordinate degree analysis, factor analysis, forward stepwise approach and back stepwise approach method, determined the credit risk evaluation indicators of microloan company ultimately after two screening procedures. In different development stage------early and maturity stage of microloan company, conducted different evaluation methods according to the difficulty, accessibility, reliability of characteristics of soft information and limited sample data. Analyzing the advantages and disadvantages of various credit scoring methods and evaluation criteria comparatively, and empirical study was carried out to test the existing credit risk evaluation methods of microloan. And proposed a credit risk evaluation method of mircoloan company------probabilistic neural network on cross-validation.The study designed an early warning operational processes of microloan company, analyzed early warning factors of credit risk, conducted a comprehensive evaluation method on fuzzy theory and gray system theory, taking full advantages of various external information sources, expertise knowledge and gray, ambiguity criteria of evaluation. Improving the objectivity, forward-looking conclusion of credit risk early warning, and then carried out a empirical analysis.With foreign experience mentioned above and the status of microloan companies, put forward complementary measures of credit risk control from internal and external perspective, emphasizing only through coordination and cooperation can provide firewall for microloan companies, preserving sustainable competitive advantages, promoting continuous improvement of financing environment in rural areas and competitive rural credit market.