Research On The Risk Management Of Lanzhou Micro-loan Companies

Along with the rapid development of our economy and the deepening of thefinancial system reform, the vigor of the private capital has been fully released. Inrecent years, the micro-loan companies come up with a blowout development period,and gradually developed into an indispensable part of the credit market. The constantextend of micro-loan companies, to a great extent, altered certain disadvantages offinancial institutes, which received support from local government. Besides, itimproved the flexibility vitality of financial markets, standardizes the behavior offolk credit market, and promoted the rapid development of farmers as well as thesmall and medium enterprises. However, with the expansion of the loan businesscoverage, the loan risk of the micro-loan companies began to highlight. Therefore,effective management and control of loan risk will become the key factors to thesustainable development of micro-loan companies. Based on these, this article selectsmicro-loan companies of Lanzhou city as the research object, deeply studied the riskmanagement problems of micro-loan companies in Lanzhou. This study not onlyclarified the main influence factors of risk management performance, but also did apositive exploration of micro-loan companies of Lanzhou city.This paper firstly reviewed the related concepts and basic theories of micro-loancompanies’ risk management on the basis of the literature search and data collecting.Secondly, it summarized the overall condition and specific developmentcharacteristics of micro-loan companies in Lanzhou city, and concluded the main risk,the dilemma of risk management and the cause of risk management dilemma. Thirdly,it researched the risk management performance of the micro-loan companies ofLanzhou city from the empirical point of view, and come up with certain suggestionsof improving risk management of Lanzhou micro-loan companies from optimizingthe external environment and improving the internal risk management system. Theresearch conclusions of this paper are: firstly, the main service objects of Lanzhoumicro-loan companies are farmers, medium-sized and small enterprises andindividual business; secondly, the characteristics of loan services are flexible andsimple; thirdly, Lanzhou microfinance company risks mainly include credit risk,management risk and liquidity risk, and the dilemma of risk management are systemconstruction imperfect, organization structure incomplete and management processno-scientific; fourthly, the main factors affects Lanzhou city micro-loans companies’ risk management are the ability of borrowers to repay the loan, bad credit records,the status of repaying loan and loan company risk management level. What’s more,the influence from the ability of borrowers to repay loan and loan company riskmanagement are the most obvious.