Study On The Legal Supervision Of Microcredit Company

As a new financial method originating abroad, microcredit provides small amount continued credit services for low-income people and micro-enterprises. As an effective complement to traditional financial institutions, microcredit companies provide continuing financial support and ease the financing difficulties of medium-sized, small, and micro enterprises and "three rural", making significant contributions to the economic development of our society. However, the problems exposed continuously have affected the development of microcredit companies, such as the fuzziness of legal position for microcredit companies、the uncertainty of supervising subject access and exit system imperfect.This paper, adopting contrasting methods, analyze the present situation and insufficient of supervision system of microcredit companies in China, and propose appropriate recommendations to improve the supervision system by learning from the successful experience of foreign and combining with national conditions. This paper includes five sections.In Section I, the definition of microcredit companies is presented. The first microcredit company in the world was founded by Muhammad Yunus, a Bangladeshi economist, aimed at providing microfinance for rural economic development. With the impact on the economic development expanding, the customers of microcredit companies extended from the poor people to including micro-enterprises, and microcredit companies were extended to the world. However, the definition of microcredit companies was indefinable in both theory and practice. In 2008, the definition of microcredit company was confirmed by the " Guiding opinions on the pilot of microcredit companies " (hereinafter referred to as "Guiding opinions"). By the interpretation of " Guiding opinions ", this paper point out the current legal definition of microcredit companies, summarize the characteristics, conclude the function of microcredit companies in the economic development and compare it with other financial institutions to make clear the connotation and extension of concept of microfinance companies, laying the foundation for further study below.In Section II, the present situation of microcredit companies in China and the necessity of supervision system are introduced. In the 1990s, microcredit companies began to receive the attention and be promoted by the government. Since then, microcredit companies have been in the process of rapid development, and the problems on supervision system and the industry risk gradually exposed. As a kind of financial innovation, in theory, microcredit companies impact on the traditional financial supervision mode, increasing the risk of financial markets, and in practice, microcredit companies bear the moral risk of participants, operational risk and the risk of national macroeconomic control. Solving the above problems need the effective supervision system of microcredit companies.In Section III, the present situation and insufficient of supervision system of microcredit companies in China are described. The existing legal basis of microcredit companies in China are the "Guiding opinions on the pilot of microcredit company " jointly issued by China Banking Regulatory Commission and the People’s Bank of China and management measures formulated by the provinces and cities. Market access and operation system are regulated from the aspect of specific supervision system. The imperfect of supervision system of microcredit companies include the fuzziness of legal position, the lack of effective legal basis on foundation, the uncertainty of regulatory body, adverse supervision of loan rate, the imperfect of afterwards relief system and the mismatch between supervision system and financial markets.In Section IV, the supervision systems of microcredit companies in different countries and areas are compared with the supervision system in China. The significance of imitating the foreign advanced legal and regulatory system to improve the supervision system in China is elucidated in respect of legal construction, supervising subject, and market mechanism construction.In Section V, the paper is concluded, and suggestions to improve the supervision systems of microcredit companies in China are proposed. For example, speed up the legislative process, improve the legal system of the supervision of microcredit companies, innovate supervision mechanism to confirm the supervising subject of microcredit companies, relax market access and refine the market exit mechanism, strengthen the guidance of regulatory policy and improve the operation system of microcredit companies by risk control and interest rate adjustment.