Chinese Microfinance Companies Role Research Questions

Small loan company is a result of China’s financial system innovation, and it provides financing channels for rural and urban low-income populations. Small loan company is an important part of China’s complete financial system. Since2005the pilot work of small loan company began in China, the discussion about small loan companies has never stopped. The scholars still have not reached an agreement on how to determine the role of small loan companies in China’s financial system. In practice of eight years, small loan companies have encountered some serious problems. They bring a lot of challenges and threats to small loan companies.In this social context, this article regards the role of small loan companies as an entry point to parse out the reasons that led to many complex problems, and then comes up with some appropriate suggestions for the development of small loan companies. This paper is expected to put forward some valuable insights, including formulating government regulatory system and operational mechanism of small loan companies, based on comprehensive understanding of institutions about small loan companies.This article except preface and closing outside is divided into four parts altogether, including theoretical foundation and overview of small loan companies, development of role orientation problem with small loan companies, the internal mechanism of role orientation problems, adjustments of role orientation of China’s small loan companies. This paper tries to be innovative in some aspects. First, this paper sums up the concept and essential attribute of small loan companies from related government documents, as the logical starting point. Second, this article teases out the development of small loan companies from China’s financial history. Only in this way, can we resolve the role orientation problems better. Third, this article clearly pointed out, dislocation of legal form and economic substance is the core of role orientation problems of small loan companies.Guided by the methods, this article comes up with five principles to adjust the role orientation of China’s small loan companies. Based on the principles, this paper investigates the internal mechanism of role orientation problems, and makes the point that the contradiction between central and local governments in allocation of financial resources is the essential reason for the problems.It is very important for our country to study the role orientation problems of China’s small loan companies. We wish that more and more scholars will be engaged in the research.