Research On Consumer Protection In Microloan

Traditional financial institutions have been always reluctant to afford loans or evenother financial services to the poor who can not provide guarantees, which made thepoor who wanted to change the living conditions have to turn to the usurers forfinancial support, and endure their exploits. Such special groups, who are poor ineconomy but they could gradually change their plight if they can get small amounts ofmoney, are just the main target of microcredit or microfinance today. The famousperson, Muhammad Yunus, who initiated microcredit to help the poor out of poverty,won the Nobel Peace Prize in2006because of his outstanding contribution in the workof microcredit which later developed into microloan and then microfinance. Since then,this special financial service has been developing rapidly in the world, especially inAsia, Africa and Latin America. Although the Indian microloan crisis in2010hasaffected the rapid development of microloan in the world to some extent, but it doesnot reverse the development trends of microloan in the global. In contrast, manycountries though reflection on the Indian microloan crisis, are actively taking variousmeasures to make the microloan or even microfinance keep more healthy and stabledevelopment, so that they can achieve their purpose on anti-poverty and promotingdevelopment.In1994, China's first microloan institution was established by the RuralDevelopment Institute of CASS (Chinese Academy of Social Sciences) in Yi County,Hebei Province. Since then, China's microloan has gone through20years of history. Inthe past20years, the public interests in microloan have been degraded gradually dueto the impact of the commercial tide in this industry, while the microloan borrowers,who had been well cared of by the microloan institutions, have gradually lost theiroriginal positions. Moreover, driven by the strong and blind pursuit of profits, themicroloan operators have begun to infringe the legitimate rights and interests ofconsumers. The global financial crisis caused by the U.S. subprime mortgage crisis hasshown that the lack of consumer protection in financial service is the important reasonfor the crisis. In the microloan, a special financial service, if we continue to ignore thefact consumers are infringed, another crisis in microloan would come and that would hurt the consumers and the microloan industry. In addition, it also would effect therealization of many public welfare purposes, such as reducing social poverty,improving people's livelihood, promoting economic development and maintainingsocial stability, and so on.But whether from the point of view of the international, the domestic, thegovernment or the non-government, it is really a new subject to research on how toprovide adequate legal protection for microloan consumers. Therefore, this paperneeds to define the microloan and its consumers first, and take them as the logicalstarting point to analyze relevant issues. After that, according to the development statusof the domestic microloan, this paper summarizes the China's consumer protectionissues which currently exist in the microloan, and then explores the causes of theseproblems. The result of the analysis shows that the reasons for that microloanconsumers have been infringed, or unable to obtain adequate protection aremultifaceted, and one of the key reasons is the relevant legislation is quite inadequateto protect them. Hereby, based on the analysis of existing inadequate legal protectionmode, this paper from the macro perspective, points out we should build a new legalprotection mode including "general law" and "special law" to remedy the defects in theoriginal mode which only provides legal protection by general laws. Then, to makesuch new protection mode can be implemented and properly resolve the domesticmicroloan consumer protection issues, the paper expounds how to protect themicroloan consumers' special rights by the special law. The special rights include theright to information, anti-discrimination right, convenient and transparent trading right,the right to refuse interference and infringement in collection, etc. Finally, according tothe aforementioned microloan consumer protection issues and their causes, the paper,from the technical perspective, elaborates how to improve the whole microloanconsumer protection mechanisms, consisting of the improvement in legislation,administrative supervision, judicial protection, self-discipline and the participation andplay of social forces.In the study, the author adopted many research methods, such as historical analysis,economic analysis, empirical analysis, and comparative studies. By using thesemethods, the arguments seem more credible or convincing. Furthermore, the innovations of this paper are: first, it is the first time to clarify the microloan and itsconsumer from a legal perspective; second, it is also the first time to do such acomprehensive analysis on the domestic microloan consumer protection issues and putforward the corresponding solving suggestions in China. In short, this paper is the firsttime to pay legal attention to microloan consumers—a special vulnerable group in theacademic community, and what the author wants is just to attract more people to jointhe research work on the consumer rights of the poor and how to protect thoseconsumers who accept some certain services with public interests.