Research On Risk Management Of Microfinance Companies Under The Pressure Of Economic Downturn

According to the actual development situation,we can infer that both China and foreign developed countries face management issues caused by financial problems,many financial predators therefore disappeared,and more small financial institutions or quasi financial institutions and disappeared too.In foreign countries,due to the risk of exposure to a huge financial losses suffered by judicial institutions,and even lead to bankruptcy cases of relevant institutions are everywhere.For example,in 1991 the International Commercial Bank of credit events,the Bank of Bahrain in 1995,the French bank Societal General events in 2008,etc..In china,many institutions non-performing assets rate is within a certain period fast growth,for credit institutions is very bad.From the view of the development of China’s trust industry,after the continuous reforms,the number was effectively controlled,which to a certain degree prevented non-performing assets rate of ascension.In the process of development,we should make a timely summary of the experience of our predecessors,not in order to develop and ignore the importance of the risk.With the downward pressure on the economy and the growth of operation time,small loan company’s various types of risk problems gradually accumulated and exposed.So far,small loan companies are widely anxious and in difficult time.Since the small loan companies are engaged in the loan business of non-banking financial institutions,the risk of small loan companies is different from the banking financial institutions,they have own risk characteristics.If the small loan companies can’t maintain the risk factors in reasonable range,it will damage their own interests,some of the problems associated with will rise.And if the credit risk continually grows,with their own problems,enterprises may need to spend a lot of cost,and may harm the interests of shareholders.If the problem happened to small loan companies,the consequences is fatal.Both serious risk of loan losses and major compliance risks of exposure are detrimental to the loan company’s image,the supervision department of government,stakeholders,and shareholders will have a skeptical attitude to their risk management capability.Therefore,if small loan companies want to continue to develop,it is necessary to mind their two roles-market operations and the role of creditors.The role of market operations requires small loan companies to run business in accordance with the laws of the market,and achieve compliance business and take the initiative to accept government regulatory and legal constraints;and the role of creditors requires small loan companies to be familiar with the credit characteristic,the maintenance of claims the general rules and methods,and the creditors shall perform the relevant obligations and may exercise the rights and master microfinance business operation of the basic procedures and risk management measures.Although the main factor which influence the development goal of microfinance is the combination of regulations risk and credit risk,but the importance of internal risk can not be ignored,and staff’s skills,attitude,and behavior are important parts of the internal factors.Hans Ulrich-Derek in the "Financial Services Operations Risk Management Handbook" referred eight financial disaster events since 1991,and pointed out: almost all of the catastrophic events are related to the employees of the financial institutions and operational risk and moral risk,and such employees are not only the base of traders and other employees,but also the chief executive officer,chief financial officer and other senior executives.Based on compliance risk,credit risk,operational risk and moral hazard,we should make efforts to prevent and avoid these risks.Therefore,we should researches the innovation in traditional loan management technology to support the small loan companies select potential customers and implementation of process control,and different from the traditional credit loan management after the borrower,loan losses for the corresponding avoidance;analysis of relevant laws and regulations and small loans and small loan companies and the corresponding regulatory policy and regulatory measures for this system,for the small loan companies better compliance management,avoid serious compliance risk;to study how to promote microfinance company employees right to follow relevant laws and regulations and policies,as well as the scientific loan management technology and methods of correct use have become an important study of microfinance theory and practice to solve.