Research On The Risk And Control Of The 'Mutual Guarantee Loan' Project

After 40 years of reform and opening up,with the continuous development of our economy,small and medium enterprises(a.k.a.SME)are increasingly becoming the main force to promote local economic development,promote employment and enhance local economic strength.However,due to the lack of credit of SME and the low value of collateral,the loan quota of commercial banks cannot meet the development requirements of them.In recent years,in the context of the transformation of government functions,local governments have become increasingly aware of the rational use of government service functions that may certainly bring more financial support to them.The form with which local governments use their credibility to take risks and obtain loans of SME's is becoming a new attempt to help SME to develop.'Mutual Guarantee Loan' is a new model that emerges under this background.The core idea of the project is to use local governments' credit to increase the deficiency of SME to obtain commercial bank loans,and local governments share the risk when some corporate loans can not be repaid on schedule.In this way,we can achieve the "win-win-win" situation of local economic upgrading,good corporate capital operation,and commercial banksobtaining loan principal and interest.However,the local governments have many defects in risk control of the project,so the project may not go smoothly or even fail,causes a lot of losses.From the perspective of local governments,this paper try to analyze the political,legal,financial and market risks that local governments bear in the process of participating in cooperation with commercial banks and SME.Taking the case of the project of ‘Mutual Guarantee Loan' in Bayannur as an example,this paper try to analyze the problems of local governments' risk control and the causes of the problem.At the same time,it puts forward suggestions from three aspects: project management,exit mode of the project,and profit distribution,so as to improve the risk control of local governments in the cooperation mode with commercial banks and SME.