Research On Customer Credit Risk Assessment Of Microloan Company

Since the pilot of microloan companies have achieved certain suceess and actively promoted by local governments, microloan companies have set up and in operation formally in china.As of June2013,there have founded7086microloan companies.Microloan is a pointer to micro-enterprises or individual businesses to provide a smaller amount of loan services,The loan services have several characteristics:the process is simple,the amount is small,and don’t need guarantee.The emergence of microloan companies has fill the gaps of the traditional financial institutions and guarantee the development of SMEs and individual businesses. However, due to the special nature of microloan companies, there are many deep-seated problems to be solved.Credit risk is the main risk faced by microloan companies.Traditional financial institutions monopolized the quality customers,microloan companies lend money to clients relying mainly on the subjective judgment of loan officers,and many other reasons lead to microloan companies face credit risk.Microfinance is a core business of microloan company,credit risk leads to a large amount of uncollectible bad debts,it will seriously affect the credit assets quality.The key to controling risk is identifying risk firstly. Customers are the main source of credit risk. Choosing a good credit status help to reduce the occurrence probability of credit risk. Therefore, we should control risk from the source.On China’s microloan companies, credit risk has the following characteristics first,the credit asset quality is not high.second,The type of credit assets is single. third, the credit risk is much higher than other types of financial institutions. last, microloan companies can not effectively measure credit risk.And,in the management of credit risk,we also have many shortcomings.For example,the foundation of credit risk management is weak,credit officers judge credit risk alone, credit risk management system is imperfect and so on. The above reflect the inadequacies of microloan companies’credit risk management.All of this can have a bad influence on the development of the microloan industry.In this context,credit risk management of microloan company is significance practically.In the past,most study about companies are from a qualitative point of view, analyzing the business model of microloan or sustainable development. After understanding the rise and current situation of microloan companies,the credit risk characteristics and management of credit risk,we set the Fullerton microcredit as a research example and introduce Fullerton’s basic situation, including its founding,operating conditions and customer composition.Finally we use descriptive statistical method to detect their credit risk preliminary.Based on this,we studied the correlation between the credit risks and customer situations,to identify the factors affecting customer repayments.Then we analysis the credit status of past customers to identify new customers who has the potential to break a contract.By use Logistic regression models and neural network model,we can further analyze the quantitative relationship between the customers and the risk.In this paper,we use the literature research,combination of qualitative and quantitative analysis methods, empirical research method.Through theoretical analysis,we believe the factors to affect the credit risk of microloan companies are related to borrower’s basic situation,operating stability, credit hi story. Through empirical research on Fullerton microcredit, we found that good credit scoring model can help identify new customer who has the potential to break a contract.Then, we make some recommendations,such as build customer resource files,establish and continuously improve the credit system database, select the scientific evaluation model,pay attention to the important of the role microfinance loan officers play in credit risk assessment and establish a scientific,accurate,andefficient decision-making system of credit review.We hope to reduce the credit risk of the industry and maintain the sustained and healthy development of microloan companies.