Institutional Dilemma And Legal Perfection Of Small Loan Company

Our country to maintain the stability of the financial markets and to promote economicdevelopment has carried out in2008the pilot of small loan companies in the field of privatelending, and gradually spread throughout the country. The institutional innovation of smallloan companies has partly solved the pressing economic difficulties for low-income groups offarmers, solved the plight of SME financing, and also to some extent promoted thestandardization of long-term private credit market in the regulatory state, filled theinstitutional blank of civil microlending market. A large number of small loan companies hasflourished in their business, while small loan companies as an emerging financialorganizational model is still in the exploratory stage, there are put up some shortages such aslack of professionals, no long-term mechanism in the internal management, extremelyimperfect in micro-credit legislation in many aspects and subject to more restrictive bynational policies and regulations in the scope of business and the mode of operation. Thecontinuable development of small loan companies is hardly sustainable, therefore it is anurgent need to seek a institutional breakout against encircled system, build a reasonablefinancial support, and gradually improve the operational mechanisms in financial practice.In addition to the introduction and conclusion, text is divided into four parts.The first part. Making a depth analysis to the actual situation of China’s private lendingmarket segments recently, we get a conclusion that there are a large number of idle privatecapital,a lot of loan demand of SME and farmers groups, non-formal private loans seriouslydisrupting financial order,as well as a deeply development of modern agriculturalindustrialization and marketization. Then,the text points to the historical mission and value ofthe small loan companies, and a brief summary of the characteristics of this unique system ofsmall loan companies,in order to do a necessary bedding for the discussion later.The second part of the body.To induce the imperfections of the legal system of smallloan companies, the text summed up various predicaments of financial practice, and exploredthe confronted problems of unclear legal status, absence of supervision, the welfare business,the narrow financing channel and some endangered the sustainable development of smallloan companies in the emerging small loan companies operating practices in China. The predicaments largely due to our backwardmechanism of financial supervision and conservative financial innovation policies, that makethe companies as innovative financial organizations fall into heavy straits surrounded.Narrow funding sources, limited credit business path, congenital lack of developmentpotential, all above make it difficult to achieve the sustainable development of theorganization.The third part of the body. The introduction of the world’s most advanced microfinanceconcepts and successful foreign styles of the micro-credit system has been extensivelybeneficial to the transplantation and innovation of China’s small loan companies. And in thethird section of this part, the text discusses the concept and practice of the internationalinclusive financial system to fit the value orientation of China’s small loan companies andestablish the “inclusive” keynote of the institutional framework.The fourth part of the body is the specific recommendations breakthrough the heavystraits surrounded of small loan companies. The text talks about the improvement of theregulatory system and the legal supervision system, sums up the achievements andshortcomings of the pilot styles,and then advocates to build a system of small loan companieswith the basic value of “inclusive” and oriented by the direction of village banks.