Research On Improving The Operation Of Micro - Credit Industry

Since the CBRC and the PBC jointly issued the Guiding Opinions on the Pilot Microcredit Companies, provincial governments have formulated detailed rules for supervisory and regulatory implementation, and microcredit companies as innovative financial organizations have developed rapidly in China. The effect that the microcredit industry improves the funding conditions of small-micro enterprises and rural economic is magnificent, while the effect of the expansion of financial coverage is also obvious. In addition, the development of microcredit industry is beneficial to the legalization and regulation of informal lending within Chinese economy. But from the beginning, there have been multiple problems within the microcredit industry. In the process of development, the industry has to face more challenges such as economic fluctuations and increased market competition. Therefore, the author holds the opinion that we should improve the operating conditions along with the ability of sustainable development of microcredit companies, and has conducted a preliminary study on this issue.Combing through the historical literature, consulting to the relevant policies and regulations, analyzing industrial data of microcredit companies, comparing the concept of microcredit with the concept of inclusive finance, introducing foreign experience of microcredit and inclusive finance, this thesis has researched the operating situation of the microcredit industry, its problems, and the reasons of these problems, and has put forward countermeasures from aspects of both governance and business.From the aspect of business, microcredit industry faces problems as lack of market development, narrow funding sources, lack of development incentive and higher risk level. There are necessities for the microcredit companies to explore business innovation, strengthen risk management, improve corporate governance, improve the ability of management and solve various difficulties encountered in operation. Through these efforts, they can enhance their ability of operation and development. Aiming at those problems that the industry faces, this thesis provides the following specific suggestions which include: cooperation with other financial entities to enhance capital efficiency and risk control; making adequate use of existing platforms such as the PBC’s credit information system, considering of the establishment of funds coordination platform of microcredit companies; through internal and external means to strengthen risk control; efforts on innovation of products, channels along with business models; and multi-channels to obtain operating funds which improve capital utilization efficiency.From the aspect of supervision and governance, the microcredit companies confront problems such as not-totally-settled legal status, imperfect regulatory environment and various operating limits. There are necessities for the governments to duly clarify microcredit companies’ legal status further, to strengthen those already existed encouraging policies, and to formulate new relevant policies, so that the governments can improve the external environment for the development of microcredit companies. Besides, additional support must be given to the microcredit companies that dedicate to poverty alleviation. Aiming at those problems, the thesis puts forward the following specific suggestions which include: moderate regulatory requirements which encourage business innovation; increased policy support; reduced tax burden; ensuring microcredit companies’ regulatory compliance; and gradually forming a sufficient and effective professional supervision system.