Research On The Development Of Small Loan Companies In Hubci Province

Since their legalization in China in2008, small loan companies have effectivelyactivated private fund and solved the problem of financing difficulty of “agriculture,farmer and rural area” and SMEs by their “small, flexible and convenient”characteristic service, and become a useful supplement of China’s existing financialsystem. Despite their rapid growth in China over the past few years, small loancompanies are still in the embryonic stage of development on the whole, theyencountered a lot of predicaments and pressure from themselves and outside duringthe continuous process of theory and practice study. This article first explains thebackground and meaning of selected title, then expatiates on the content andmethods of research. Regarding the introduction of related theories, this articlesummarizes the research achievements in the conception, types, risk control andoperation modes of small loan companies of scholars both at home and abroad, onthis basis, this article thoroughly analyzes the basic characters of small loancompanies: operating small loan business; only providing loan, without depositbusiness; high quality of loan; lacking good projects; high interest rate; simpleassurance procedures, and profoundly analyzes small loan company’s risk on theaspects of credit, operation and management. This establishes the theory foundationfor studying on current development of small loan companies in Hubei provinceand proposing the pointed policy suggestions.After the experiments on small loan companies at the end of2008, there arealready over130small loan companies founded in Hubei province during threeyears of development. Research indicates that small loan companies in Hubeiprovince have played positive roles on financing the “agriculture, farmer and ruralarea” and small and micro businesses, effectively supported the development oflocal economy. But small loan companies in Hubei province are still in the earlystage of development, there are many problems in their operation, such as theirsmall scale and the lagging of regulatory authorities; the poor basic condition forsustainable operation, imprudence of risk control and high level of interest rate; andthe lack of legal system. Based on the comprehensive survey of three developmentmodels of small loan company around the globe, this article considers thatgovernment and all levels of departments should create a favorable environment,provide more support to small loan companies, improve the credit environment,strengthen the construction of credit system of small loan companies, so as toensure a healthy, stable growth of small loan companies. At the same time, thesmall loan companies themselves should strengthen their risk preventionmechanism and daily management system, increase inner risk control, improve theinnovation of operation model and management.