Research On Risk Management Of Loan Assisitance In Financial Institutions Under Internet Finance Supervison Policies

At present,China is undergoing a new normal for economic development and a supply side structural reform.Under such circumstance,the contradiction prevails between the borrowing of micro,small and medium-sized enterprises and the lending of financial institutions.However,due to the development of technology,traditional financial industries have merged with the internet at an accelerated speed.Conventional financial institutions have been actively seeking transformation to explore new profits growth points.Against this backdrop,the cooperation models among financial institutions,internet companies and fin-tech firms have kept popping out,and brought the loan assistance business models on stage.The loan assistance business is an emerging business model.It is characterized by licensed financial institutions designing loan products,mastering core risk control links,providing funds and obtaining benefits,and operated by institutions with strong risk identification capabilities and better asset management proficiency,represented by online based financial institutions,to offer services such as customer acquisition,initial review,face-to-face signing,and post-loan management.(These financial institutions can be named “loan assistance institutions” for short.)This business model uses the integration of Internet technology and big data information to provide support and services for traditional financial industries in terms of technology,data,risk management,and operating models.It can effectively break the barriers of traditional financial intermediary agents,eliminate information asymmetry,reduce transaction costs,improve payment efficiency,and undertake financial risks appropriately.Considering the increasing two-way penetration of the Internet and the financial industry,and the deepening cooperation between financial and loan assistance institutions,this model,compared with traditional ones,has a more complex business structure,featuring more participants,more widely applied technology,and more difficult risk identification,measurement and control.In addition,financial institutions now face risk sources with greater complexity,elusiveness and connectivity in terms of contents and forms.Regulators and participants in this business model began to find ways to alleviate the contradiction between supply and demand in the credit business,identify the risks in loan assistance business,take measures to prevent the risk from spreading,so as to boost a healthy development and achieve win-win result for all parties.This paper first attempts to brief on the development of loan assistance business in China by studying literature of scholars both at home and abroad on credit risk management and on the ties between financial and loan assistance institutions.Then this paper illustrates the interest appeals and profit models of all parties after examining major participants and the cooperation methods,and elaborates on the inevitability of cooperation among these parties.The risk factors of loan assistance are also analyzed from two distinctive perspectives: the institution as a whole and individual borrowers.Base on aforementioned discoveries,and taking the following factors into consideration,such as social and economic development,characteristics of the business,revolution of regulatory polices,this paper tries to build a risk control model with the data collected in practice,and bring forth systematic risk management measures from three phases: before the loan,during the loan and after the loan,which might shed light on the risk management in actual operation of the business.Finally,this paper concludes with its contributions and limitations.