The Study On Interior Control System Of Money Shop In The Context Of Financial Agitation

The informal financial institutions in China have been taking shape in recent years. However, under the impact of the loan crisis of United States in 2008, many middle and small-sized enterprises bankrupted because of their deteriorative export trade. Meanwhile, the informal financial institutions, which offer loans to these enterprises, have to face the risk of losing loan.Consequently, it is worth making a further investigation about how to perfect the internal controls of these institutions and guard against financial risks.By analyzing the internal control system of old-style money shops in Shanghai as well as their behaviors in previous financial agitations, we can conclude that the direct reason for speculation and financial fragility of money shops is their invalid internal control system. By analyzing the case of Fu Yuan in the context of financial agitation in 1950s, we can conclude that the money shops which have effective internal control system can resist financial risks.Eventually, I have summed up the experience that informal financial institutions can learn from to optimize their internal controls:Firstly, Micro-credit company should improve enterprise governance structure further and make clear the obligation of directors,supervisors and managers.Secondly, regional associations of Micro-credit company should be set up to enhance the supervision over these informal financial institutions.Thirdly, it is necessary to maintain diversity in human resources and improve their professional quality on finance.