A Research Study On The Government’s Regulation Of Small-sum Loan Companies In Ziyang City

Microfinance industry is gaining its popularity and under rapid development in the context of Pratt & Whitney financial tide and financial innovation. Launched by Muhammad Yunus, the Nobel prize winner from Bangladesh, Grameen Bank mode has been highly praised for its privilege to low-income groups and spread worldwidesince 1970 s. China officially opened the microfinance market in 2005. And in 2008, the Guiding Opinions of China Banking Regulatory Commission and the People’s Bank of China on the Pilot Operations of Small-sum Loan Companiespromptedmicrofinance acrossChina.From 2009 to 2010,the State Council of China has issued a series of documentations to encourage and guide private capital into the financial services sector and set up small-sum loan companies. Since then, microfinance business in Ziyang city, Sichuan Province had been launched in succession, and financial regulation of micro-credit industry has been started correspondingly.Currently, a mass of empirical studies have been made by overseas scholars and they proved that micro-credit is positive in the relief of poverty and income inequality, and there exist cost effectsof credit portfolio and the optimal patterns of credit periodsimultaneously. Scholars in China has mainly focused on the operating model, risk management and regulation system of micro-credit industry. They pointed out that the imperfection of regulation system and the lack of standardization in risk management are mainly caused by the absence of specific legislations.Reviewed the literatures on micro-creditregulation both from China and abroad, this paper made anon-the-spot investigation about the micro-credit institutions in Ziyang city based on the related theories and studies. The author concluded that the rapid development of micro-credit industry in Ziyang played a vital role in the improvement of service to financial weak links like individually owned business, SMEs and the “Three RuralIssues”, i.e. agriculture, rural areas and farmers via questionnaire surveys and interviews.However, it still needs to promote the support of healthy development of the small-sum loan companies and strengthen regulations. Essentially speaking, Ziyang government haskept an eye on financial regulation and performedwith innovation, though there stillexist some imperfection in the implementation of rules and regulation. Given this context, some solutions and countermeasures are proposed in this paper from the perspectives of legislation, regulation planning,implementation of the regulations, small-sum loan companies file establishment and risk response mechanism.