A Study On The Legal Problems Of Microfinance Of Commercial Banks In China

Microfinance is the provision of micro credit services to low-income classes on a sustainable basis. With market economy as its operating environment. Microfinance are typically made at high rates of interest, while the loans are usually unsecured and uncollateralized. Here the low-income classes include low income population and small enterprises. Based on the theory of political economy, the microfinance program is formulated on the following two presuppositions: First, trust and firm belief that poor people will pay-back. Second, treat credit as a kind of basic right, and the poor have the equal right to obtain the loan. This study targets the SMEs (small and medium-sized enterprises), one of the prospective borrowers of microfinance in commercial bank. With the rapid development of the SMEs, their role in fostering economic growth and development has been widely acknowledged,however,"difficulties in financing"is now the biggest problem in hindering their further progress. Though commercial banks could be important fund providers for the financing system of SMEs, when banks faced with incompetent credit risk prevention market system, the simplest and most direct response to financing is"not credit". There are many reasons attribute to these phenomena. Offering loans to SMEs is of great benefit to banks as well as enterprises, but commercial banks are by no means philanthropists. How to cope with the financing problem of SMEs, without preventing themselves getting profits is the primary concern of the commercial banks. Microfinance in banks has two meanings: firstly,providing financial service for the SMEs, secondly, pursuing self survive and development. These two aspects are mutually linked and contradictory and how to improve the legal system in commercial bank industry to tackle the financing problems for SMEs is the focus of my study.This thesis is made up of five chapters. Chapterâ… is introduction of the background, the research status at home and abroad, and the research method as well. Part II mainly about the concept, characteristics and financial innovation functions of microfinance. The author summarizes the present legal status and the main problems existing of bank microfinance in China. Chapterâ…¢analyzes the necessity and explores ways for commercial banks to venture microfinance program. Chapterâ…£introduces the legal system of microfinance in the banks of foreign countries and its enlightenment to China. In Chapterâ…¤, the author explains my opinion on how to improve the legal system of commercial banks in China, which is also the innovation of my thesis.