A Credit Risk Evaluation Index Research Of Small Loan Companies

Small loan company is an important way for small and medium-sized enterprises to finance. With the background of the national financial reforms are performing and capital market driven by huge benefits, the number of small loan companies are still growing. While on the one hand, some small loan companies of the area where the private economy is particularly active, have collapsed. In the final analysis, this circumstance is largely due to the small loan companies’ability of recognize and control the credit risks are very weak.In recent years, the financial world put more and more attention at monitoring.evaluating and managing the credit risk. They are trying to make continuous improvement of the traditional credit risk evaluation methods, at the same time, they put effort to study and innovate, and they have launched a series of new credit risk evaluation methods and models. Credit risk evaluation method is increasingly changed from qualitative to quantitative, from simple to complex, from the micro level of individual asset credit risk evaluation to the trend of macro-level portfolio credit risk evaluation. But the sophisticated models and methods in the credit risk management of commercial banks are not entirely suitable for small loan companies.That’s why I think that the study of risk evaluation method suitable for the small loan business characteristics and customer groups is very important. The research ideas can be divided into the following three parts. The first part is a brief introduction of existing commercial bank credit risk assessment models and their basic principles; The second part is the introduction of the characteristics of our nation’s small loan companies; I analysed whether these existing credit risk evaluation models are applicable to small loan companies; The third part is the innovative credit risk evaluation method I mad for small loan companies, based on the study of existing credit risk evaluating methods. Around these three steps, this paper consists of a total of eight sections:Section One is the Introduction. This part shows the meaning,purpose. ideas of this research. It shows the brief summary of the research focus and the research methods of this paper.Section Two shows the literature review. It contained a brief review of basic principle of credit risk and outlined existing credit risk assessment models. This part summarized the literature review of domestic and foreign scholars’ studies on credit risk and risk warning method, including the concept of credit risk, the causes and influencing factors of this problem. Then I summed up the academic community’s, the financial community’s efforts on the credit risk assessment models in recent years. This part consisted of the theory foundation for the explore of appropriate credit risk evaluation methods for small loan companies.Section Three is a introduction of the JH Small Loan Company. I analysed whether the foregoing credit risk evaluation models are applicable to small loan companies. This part described the characteristics of small loan companies. I have threi. reasons to select JH micro-credit Limited as the case of this article. First, I had a internship practice in the company of up to few months. Second, JH micro-credit Limited Company is an industry leader, it is one of the best hundred of the country’s small loan companies. Third, JH’s business covers a wide range of both small loans for agricultural farmers, commercial merchants, like traditional small loan company, and also have credit loans for the early start-up companies of science and technology, and so on. So it is more representative, I can study credit risk evaluation methods and index from more different aspects.Section Four is the core part of this paper of the the JH micro-loan companies credit risk assessment model instance. Draw on existing credit risk assessment model theories and methodologies, I applicated the useful part for small loan companies, to build a set of technology start-up enterprise customer credit risk evaluation system, which integrated Expertise Discriminantion Method, Ratio Analysis Method, Credit Score Method, and so on. The evaluation index combined of qualitative and quantitative indicators and solve the problem of JH qualitative indicators lack of measure method.Section Five is the conclusion. The Section is a summary of this article, pointed out that the conclusion of this study, and the insufficient aspect of my research, and prospects the future development of this area.