About The Legal Status Of The Financial Guarantee Company

The financial guarantee is one kind of guarantee taking the financial claim as the guarantee object. The financial guarantee company is the financial intermediary organization specialized in the credit guarantee and provides the credit guarantee in the economic life .It is a special non-bank financial organization with the unique function of enhancing credit and the characteristic of managing risk. The finance guarantee company plays the role as a bridge in the financing movement between the small and medium enterprises (SMEs )and banks ,enhancing the SMEs'credit,preventing and reducing the credit risk of banks to financing, and guiding the flow of funds. It's establishment solves the SMEs'difficultly to finance and the bank's difficulty to give loans, so the guarantee company is an indispensable main body in the finance activity.To alleviate the SMEs'financing difficulties by establishing the credit guarantee organization is the prevailing practice of the countries supporting the development of SMEs. Practice has proved that China's financial guarantee companies have made considerable contributions in resolving the financing difficulties,promoting a sound social credit mechanisms and achieving good economic and social benefits. But because of market location deviation of the financial guarantee companies,legal status unknown,,laws and regulations lag,risk management system unscientific,no national or regional monitoring mechanism and coupled with missing enterprise credit-integrity system , the gurantee company has plagued with problems in the development process, and some gurantee companies therefore face a dilemma. To give full play to the financial gurantee companies'role and to achieve their legal status commensurate function needs to draw on the experience of foreign legislation, accelerate legislation, clear the legal position of the financial guarantee companies, and make clearly regulation in the financial guarantee company's industry access,funding,scope of business,institutional systems,risk diversification and control systems,industury's self-discipline and external supervision,the financial guarantee company's guarantee mechanism,security procedures and so on. Safeguard the healthy development of the financial gurantee companies in the system.