Analysis And Legal Prevention On Risks Emerged In The Operation Of Financing Guarantee Company

Financing guarantee company is an agency which mainly provides financingguarantee and solves small and medium-sized enterprises’ difficulties in financing.However, to achieve the purpose of serving SME better and surviving in the guaranteeindustry filled with risks, the financing guarantee company must be capable ofcontrolling and decentralizing risks. As to china, on the one hand, SME are eager tofinancing guarantee. On the other hand, financing guarantee company is still in anascent stage. The capability of controlling risk and the relevant legal system areimperfect. Therefore, it is necessary to control and decentralize risks faced by thefinancing guarantee company, whether the needs of practice or institution building.This thesis analyzes the causes of risks and points out the shortcomings of our legalsystem from the perspective of various kinds of risks faced by the financing guaranteecompany. Based on foreign legislative experience, the author tries to put forwardsome suggestions to perfect the legal system regarding risk control of the financingguarantee company.This thesis is divided into five parts:Chapter1: Typical case and overview of the financing guarantee company’sdevelopment. This chapter illustrates the concept and characteristics of the financingguarantee company through introducing and analyzing the case called “Credit Orienwise Group” and three stages as following in terms of our financing guaranteecompany are divided: explored by pilot, promoted by policies, regulated by law.Chapter2: Risks faced by the financing guarantee company and analysis ofcauses. Five kinds of risks are summarized by the author as following: credit risk,operational risk, policy risk, legal risk and the risk of the economic cycle. From theperspective of four subjects of legal relationship regarding financing guarantee, thischapter focuses on the mechanism of these risks’ formation and emphasize on thenecessity of controlling risks.Chapter3: Legal obstacles faced by financing guarantee companies in the courseof controlling risks. Firstly, the author describes the legislative situation in terms ofcontrolling risks and commends the function of current laws. Secondly, the authorgeneralizes the defects existed in current laws and regulations. Thirdly, the authorselects and focus on three laws and points out some obstacles of them, includinglegislation lags behind, more principled content and lower legal effectiveness..Chapter4: International contrast of financing guarantee companies in terms ofrisk control. According to the legal systems in other countries, the author analyzes theregulatory system, limited amount of the guarantee, business process standardization,proportionate guarantee and re-guarantee from the perspective of comparative law.Based on the analysis, the author draws some inspirations which practices of othercountries give to us.Chapter5: Suggestions perfecting the legal prevention against the risks offinancing guarantee company. Based on foreign legislative experience and with theconsideration of latest regulation promulgated by China, the author believes the legalsystem of controlling and spreading of risk should be perfected from these aspects，such as regulatory regime, market access and spread of risks.