Development Dilemmas, Legal Obstacles And Breakthrough Ways Of Small Loan Companies In China

After<Guiding Opinions of the Pilot Operation of Small-sum Loan Companies> was published by China Banking Regulatory Commission and People’s Bank of China, small loan companies sprung up rapidly around our country in 2008. However, there is the undercurrent hidden inside the prosperity. With the companies’rapid development and horizontal competition continuously, the limitations presented by the extensive and single business thought unraveled obviously. Now, small loan companies’position is under threat, and more experts, especially economists, attach importance to study the development of the companies. Yet China law professors take less attention to this issue. If we eager to resolve the difficulty to re-establish the financial state of small loan companies, we are supposed to research and analyze relative legal system. This article attempts to analyze reasons of which petty loan companies are confronted with realistic predicaments through rules and regulations from a law perspective and find a breakthrough way to optimize financial environment for its benign development.Except for Introduction and Conclusion, this article is divided into four parts:The first part is the introduction of small loan companies and the reasons for the emergence and development of its legislative process. The reasons have both objective factor for demand of financial markets and subjective factor for its own advantage, which explain the need for small loan companies existing in China. At the same time, the legislative process of the companies is divided into four period:budding, pilot, development and bottleneck stage.The second part is focusing on the Yafei Company lager than others in Wuhan and has its successful experiences in many aspects in spite of many problems. As Yafei a example, but not limited to Yafei, reality obstacles of small loan companies are summarized:investment and financing, geographical restriction, risk control, operational aspects and market delist.The third part focuses on the legal obstacles of small loan company. Based on small loan company’s plight, Legal obstacles could be correspond with the reality difficulties: financing channels are not wide, there are vacancies in higher-order laws, imperfect regulatory system, accountability is not clear, exit mechanism is not sound and so on.The fourth part is to explore the ways and measures of legal barriers. Analysis by the successful experience of the foreign small loan companies’legal system might indicate the direction; and the specific design of breakthrough ways of small loan companies is that making laws and combing local regulations, establishing a credit rating system and control risks and tax incentives, clearing regulatory body, measures and attribution of responsibility, the establishment of market exit risk warning mechanism, to build targeted exit mechanism.