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The current situation, existing problems and corresponding policy suggestions for small loan companies (No 38, 2015)


By Zhu Hongming, Research Team on The Development of China's Nongovernment Finance, Research Institute of Finance of DRC

Research Report No 38, 2015 (Total 4723)


Small loan companies have witnessed significant development since the launching of the pilot project. The main expressions are that these companies have, through quick expansion in terms of scale, turned into an important channel for nongovernmental capital flowing into financial area and financial and banking innovation has emerged in large numbers. However, there are many obstacles and challenges facing the development of small loan companies, such as the low leverage ratio leading to difficulties in keeping commercial mode, the need for improvement of development order and the increasing competiveness from outside. In order to promote small loan companies to develop healthily, it is suggested that the financing channel for low cost should be widened, the upper limit of leverage ratio should be properly increased to effectively promote leverage ratio. Efforts should be made to strengthen policy support such as giving necessary tax support and increasing protection for creditor's rights of small loan companies. Besides, departments concerned should improve and strengthen supervision and standardize business order through strengthening top-level design, changing relevant approach to local financial supervision, upgrading information-based supervision and implementing diversified ways of supervision.