Study On Regulatory Issues On Small-sum Loan Companies In China

Abstract:The regulatory issues of small-sum loan companies refer to the comprehensive, regular supervision and enforcement by authorities. The supervision contains leadership, organization, coordination and control of the business activities. The customers and capital sources of small-sum loan companies are different from other financial institutions, it cannot absorb public savings so that it won’t involve with the public capital and jeopardize the banking system and social stability. These characters decide the different supervision measures from other financial institutions. Moreover, the regulatory of small-sum loan companies has dual attributes; it should control the financial risks while running the business and also need to impulse the development of agriculture-countryside-farmer and small medium sized enterprises which will indirectly improve the national economics. To focus on the safety of supervision will inevitably influence the economic development, however, to ignore the safety factors will bring up more economic damages which lead by systematic financial risks. To balance the contradiction of safe and efficiency, the regulatory of small-sum loan companies needs to have a certain degree of improvement which focuses on both efficiency and safety. The government should seek out more effective compliance measures which involve the construction of centralized supervisory mechanism, the disclosing system and incentive regulatory mechanism. The government should improve the laws and regulations to improve the supervision of access and withdrawal mechanism. The government should release the supervision of capital adequacy rate to fulfill the financing demands of the small-sum loan companies.