Analysis On The Internal Control Issues Of Banks’ Inclusive Small And Micro Enterprise Loans

Small and micro enterprises are an important source of economic development and technological innovation.They have an indispensable influence in helping social and economic development,improving employment rate,easing social conflicts,and promoting the transformation of social innovation.In recent years,under the influence of multiple factors such as the international political situation,geopolitical conflicts,and the COVID-19,the global economy has faced the risk of stagflation,and the cyclical structural problems of the domestic economy have been superimposed,which has brought severe challenges to the steady economic operation,financing difficulties’ problem has intensified.The Chinese government has always attached great importance to the cultivation and support of small and micro enterprises.In order to ensure that the water of inclusive finance can drip into small and micro enterprises accurately,it has issued a series of relevant policies,requiring banks and other financial intermediaries to implement the policy transmission,truly support small and micro enterprises,finance and rescue them,and maximize the political and people’s nature of inclusive finance.In 2015,the State Council began to clarify the development arrangement of inclusive finance,requiring all financial intermediaries,especially large state-owned banks,to give priority to solving the financing difficulties of small and micro enterprises,and to conduct differentiated assessment on various indicators of inclusive financial loans of all banks,so that small and micro enterprises can develop steadily,provided that they meet their business development goals and regulatory principles.Under the attention and policy guidance at the national level,various banks have promoted the loan issuance of small and micro enterprises through specialized and differentiated business division management mechanisms.Over the years since the establishment of the management mechanism of the Business Unit,the banking industry has continued to increase the supply of loans to small and micro enterprises,especially the loans granted to small and micro enterprises that meet the requirements of the inclusive credit line(10 million and below).The loan balance has increased from 9.36 trillion yuan at the beginning of 2019 to 19.07 trillion yuan at the end of2021,which is much higher than the growth rate of local and foreign currency loans of the banking industry in the same period.As a financial enterprise stationed in J province for 108 years,Z Bank J Branch resolutely implements the decisions and arrangements of the Central Committee of the Communist Party of China and the State Council,bears in mind the ‘the top priorities of the country’,adheres to the people’s position,strengthens the feelings of serving the people,and earnestly implements people-centered development.The concept has been put into practice,and it will resolutely shoulder the responsibility of a large state-owned bank.During the same period,the balance of inclusive small and micro enterprise loans increased from 9.172 billion yuan to 20.444 billion yuan,and the number of customers increased from19,629 to 28,993.While alleviating the financing difficulties of small and micro enterprises,there are also deficiencies in internal control.Taking the Bank J branch with a large amount of loans to inclusive small and micro enterprises as an example,this article analyzes the internal control problems of inclusive loans to small and micro enterprises,which is representative and can reflect the existing deficiencies in the mode and provide suggestions for improvement.The article adopts methods of archival research and case analysis to study the cases.This paper is divided into six parts: The first part is the introduction,which mainly introduces the relevant research background and significance,and then describes the previous theoretical results,as well as the research process and suggestions of this paper.The second part is a theoretical overview.First,it outlines the relevant concepts of internal control,and then describes the internal control of bank inclusive small and micro enterprise loans and bank inclusive small and micro enterprise loans respectively.Finally,using principal-agent theory,information asymmetry theory and organizational behavior theory,the internal control of banks’ inclusive loans to small and micro enterprises is expounded.The third part introduces the actual case of the internal control of inclusive small and micro enterprise loans in J Branch of Z Bank.First,it briefly introduces the basic situation of inclusive small and micro enterprise loans in J Branch of Z Bank,including institutional settings,personnel and business,development and other situations,and then introduce the problems existing in the internal control of inclusive small and micro enterprise loans in the J branch of Bank Z,from the imperfect design of the key position evaluation,the weak control of loan approval,the lack of control over the flow of credit funds,and the poor effect of bad debt loan accountability.The four aspects of poor performance are detailed and elaborated in detail.The fourth part is to analyze the reasons for the existence of the internal control of inclusive small and micro enterprise loans in J Branch of Z Bank.Combined with the problems existing in the internal control of the J branch of the Z bank,it is revealed that the internal control of the inclusive small and micro enterprise loans of the Z bank J branch is relatively weak in the control environment,the insufficient risk assessment,the control activities are not carried out effectively,the information and communication are not smooth,lack of effectiveness of internal supervision,and analyze the causes of the problems one by one.The fifth part is to put forward suggestions on the problems existing in the internal control of inclusive loans to small and micro enterprises in J Branch of Bank Z,mainly in the following points: first,continuously optimize the control environment;second,focus on strengthening risk assessment;third,continue to improve control activities effectiveness;the fourth is to improve information and communication;the fifth is to strengthen supervision and inspection.The sixth part is the conclusion.Through the analysis,it is concluded that there is still a lot of room for improvement in the internal control of the bank’s inclusive loans to small and micro enterprises.Through continuous improvement of the internal control,it can make up for the shortcomings of the banking financial services,increase the effective financial supply,return to serving the entity economy,and promote the bank’s Inclusive small and micro enterprise loan business developed healthily.