Study On China’s Supervision Legal System Of Small Loan Company

Small loan company is the product of China’s financial reform and financial market innovation, is a trial to establish a market-oriented financial system in our country. The development of China’s private capital has been greatly suppressed because of our financial management system. For lack of corresponding channel and supervision regulations, private capital lead to tremendous legal risks in the process of breaking out of this deadlock, which serious damage the rights and interests of related interested parties and reduce the faith of private capital development.In addition, for lack of perfect institutional framework and legal protection, during the fight of "breaking through" and "supervising" for legal market status, the blindness of private capital development and absence of supervision result in ill influence on financial market.Private capital has effectively complemented the traditional and formal financial system on solving some enterprise’s financing difficulties and financial services in rural areas. Private capital has played a significant role on promoting economy development in rural area and completing China’s financial service system. Therefore, how to correctly guide the standardized development of private capital and establish complete supervision legal system is a realistic problem that we have to face. Small loan company provides an opportunity for solving this system problemSince the pilot work of 2008, small loan companies have achieved great progress in the field of domestic financial market. Small loan company provides a legal channel for private capital entering financial service market, which makes private capital step into the road of standardization and normalization. This move effectively reduces the risks of what the "secretly" development of private capital brings to financial market order. Small loan company breaks the ice of China’s financial system reform.But behind the prosperity we should also see the various adversities and resistances lay in front of the development of small loan companies. Firstly are adversities and resistances from the imperfectness of supervisory management law system, which leads to impediments from different legal sectors, seriously retarded the development extent of small loan companies; in addition, deficiencies on financing and risk control of legal structure also become a factor restricting the development of small loan companies. On that account, combining with the development status of small loan companies abroad and their supervision experience in recent years, this paper analyzes the deficiencies of supervision regulation on China’s small loan companies and the cause of those deficiencies; besides, based on the reality of the development of China’s small loan company, put forward suggestions on perfecting China’s supervision legal system regarding small loan companies.This paper mainly includes the following five parts:The first chapter focuses on introducing basic theories related to small loan companies, such as the concept of small loan company and its legal characteristics; then this paper analyzes the nature of small loan company from the aspect of legislation and theoretical research. By means of elaborating and analyzing the theories of financing institution, industrial and commercial enterprises and quasi-financing institution, combining theory with the need of regulation practice, this paper defines the nature of small loan company as financial institution. And by analyzing the differences between small loan companies and other institutions, this paper further confirms the nature of small loan company.The second chapter mainly explains the necessity of small loan company’s supervision and its theoretical foundation. This paper believes that as a market subject, in the process of operation, small loan companies are facing operation risks from enterprise internally and externally; therefore, it is necessary to establish perfect supervision system against these risks, regulating various management behavior of small loan companies so as to ensure their sustainable development. In the meantime, implementing effective regulatory measures can also effectively standardize the operation of private capital. In addition, this paper further states the theoretical foundation of small loan company’s supervision by taking financial fragility, information asymmetry, market failures and state intervention theory as entry point, establishing a theoretical guidance for improving China’s regulatory system.Chapter three is a current analysis on the supervision of China’s small loan companies. This paper firstly introduces the current supervision of China’s small loan companies from the aspect of regulatory agencies, market access, company operation, market exit and legal responsibility etc.; then combining with China’s practice condition, analyzing the present problems that China’s small loan companies are facing from legal norm system, technical merit of regulation subject and financing channels.The fourth chapter mainly introduces foreign legal system and practical experience on small loan company’s supervision. Through analyzing the related regulations of Bangladesh, the United States and Indonesia, we summarize their practices and experience and improve and perfect China’s small loan company’s supervision.In the fifth chapter, combining with foreign experience, this paper puts forward some principals and suggestions on perfecting our country’s small loan company supervisory system. We believe that perfecting the small loan company should follow the principle of according to law, modest, risk prevention and sustainable development; meanwhile put forward specific suggestions on the construction of legal system, market access and exit and financing channels.