The Study Of Development Of Micro-loan Companies Of China: The Situation、Difficulties And Countermeasures

For a long time, the development of China’s rural economy has been relatively low.Meanwhile, the urban-rural income gap is also expanding continuously. While the ruralland reform, with the content of the household contract responsibility system, did notreverse the constantly strengthening tendency of dual structure in urban and rural economy.The hysteretic rural financial reform and inefficiently allocated rural credit funds havebeen major obstacles for the development of China’s rural economy. In the1990s, Chinahas ever absorbed foreign experiences, introducing micro-credit to rural areas, aiming atreducing poverty and boosting rural economic development. Nevertheless, suchmicro-credit took the form more of poverty alleviation and did not get extensiveapplication, thus the financing difficulty of small and medium-sized enterprises and theproblem of sparse financial services in rural areas have never been solved. In order toefficiently allocate financial resources, improve the financial service environment of smalland medium-sized enterprises and rural areas and rightly guide and regulate privateinvestment, since2005, China has implemented pilot projects on Microfinance companies.Based on domestic and foreign research on micro-credit, this article combs andsummarizes the development status of Micro-Loan companies, mainly discusses riskprevention mechanism of these companies and then focuses on and analyzes majorproblems facing the Micro-Loan companies’ development, which is currently paid a gooddeal of attention. Apparently, embarrassing status is the crucial restraining factor of thesecompanies’ development. In addition, it is still not qualified to exploit the transformedvillage bank. What’s more, heavy finance and taxation burden as well as supervisionproblem hinder the expansion of Micro-Loan companies to a greater extent. At the end ofthe paper, some views on the social concerns mentioned above are proposed. In the firstplace, to solve the issues about ambiguously defined nature of firms, firstly，small-loancompanies’ nature should be defined as, at the legal level, financial institutions. Secondly,small-loan companies should insist to serve the grass roots, especially those low-incomegroups excluded by large scale banks. The developing direction of these small-loancompanies should not return to that of the banking financial institutions. Thirdly, on the premise of continuing to strengthen cooperation with the banking industry, by learningfrom the experiences of banks, intermediary service such as agency business should bedeveloped. In addition, the government should give fiscal and tax preference, even directsubsidies, if necessary, to the small-loan companies, relieving the heavy tax burden ofthese companies. Finally, these entities should be co-supervised by local authorities, thecompanies themselves and the whole society, increasing credit awareness of the wholecommunity and perfecting the general credit environment construction of our country.