Research On Credit Risk Control Of A Microfinance Corporation In Nanning

The advent of microfinance companies is an innovation in financial system. They help small and medium enterprises ease tense financial situation, promote the development of agriculture, farmers and rural economy. At the same time, microfinance companies could help increase employment rate and blaze a new path for local governments to allocate private financial resources effectively. Therefore, microfinance companies play an important role in the growth of domestic market economy. Since May,2008, relevant responsible departments of the government have providing many policies to guide microfinance companies to run in a sound and orderly way. For the last 3 years, a prosperity never seen before appeared among microfinance companies in all over the country thanks to the huge market demand and the great support of government. However, microfinance business is high-risk and the biggest risk for microfinance companies comes from credit risks. Loaners do not have abundant collateral and sufficient credit records; a lot of new established microfmance companies do not have enough experience to control business risk. In this case, microfinance companies are facing risks of collapsing resulted from the potential uncollectible accounts expense. Therefore, the research purpose of this paper is to enhance microfinance companies’ ability to control business risk, help them run in a scientific, normal and high-effective way, maintain a long-term stability for them to develop better, serve for the small and medium enterprises in Guangxi continuously, promote healthy and sustainable development of the whole microfinance industry and make contribution to further economic prosperity of Guangxi.On the basis of relevant fundamental principles, the paper researches the credit risk controlled condition of A microfinance company in Nanning. At the very beginning, the paper elaborates on interrelated theories about microfinance’s definition, features and their types of risks, bringing up basic theories for the following content-analyses of A microfinance company’s management of credit risk in Nanning. Then, the paper introduces the current situation of microfinance industry of Guangxi and the whole country, as well as A microfinance company’s business circumstance and management of credit risk controlling. Next, the paper finds that because of the inadequate current credit risk-prevention mechanism, the unsound loan construction, the random price of lending rate and the backward information management system and so on running in our society, A microfinance company’s credit risk management system is at a low level. Finally, aiming to the existing problem in credit risk controlling of A microfinance company, the paper proposes countermeasures for the company to take.