Research On The Legal Regulation Of China’s Micro-credit Company

In the context of long-term financial repression, small loan companies fill thevacuum which many formal financial institutions evacuate rural financial markets. Atthe same time, as the carrier of the system of financial innovation, it is charged withthe mission of serving for “Rural economy” and Small and Medium Enterprises.Since the first pilot begun operation in FuPing County, shaanxi Province in2005,small loan companies have entered a new stage of rapid development and showed athriving scene. Especially, after the introduction of the “small loan company pilotguidance”, the development of small loan companies have entered a new rapid stagethat the role of serving for Rural economy and guiding private financingstandardization initially apparent. However, due to it is still in primary stage, theconstruction of the legal system about small loan companies is not perfect. Forexample, the nature of the small loan companies is still controversial; the regulatorybody of it is unknown; the business model of “Only loans but not Deposit” conflictswith sustainable operations. Therefore, in order to achieve the sustained and healthydevelopment of small loan companies, it is necessary to study its legal institutionalframework, thus promoting the prosperity of the rural financial market.The article starts from the concept, characteristics and the nature of definition ofsmall loan companies, which is elaborated the basic theory of small loan companies.On this basis of the analysis of the development status of small loan companies, weare able to predict its development trend. The second part is based on Economics ofRegulation to probe into the theoretical basis of the legal regulation of small loancompanies, summed up: because of the existing asymmetric information in financialmarket, prudent Legislation is necessary for small loan companies to guard againstthe risk. But with the development of it,“legal paternalism” should be appropriate torelax the regulation mode. The third part starting from the three aspects of accesssystem, operation system, supervision system analyzes the status of legal regulationof small loan companies and points out that the current legal regulation there arecredit risk, market risk, liquidity risk and other issues. Aiming at the defects and shortcomings of the existing, author make comparison and reference of foreignmicrofinance companies to avoid operation risk and supervision system, and getinspiration: the trend of the market-oriented operation of small loan companies hasbecome, under this trend, government should actively promote the development ofit and legislation should form a proper supervision. Thinking of improving the legalregulation of small loan companies, I stress that we should adhere the principle ofinstitutionalism trend,“half penny, decentralized lending” and non-prudentialregulatory.