[Abstract]
This paper is focused on researching on the development of petty loans for the people and providing its policy implications.
Many local banks and other community credit cooperatives specialized in petty loans walked out of the markets and were merged or acquired in the process of financial structuring adjustment after the crisis. Additionally, local financial institutions changed their business strategy into profit-seeking based one.
As a result, the public role of financial intermediaries for financial supporting to small and medium enterprises and the people in local provinces has been to some extent disregarded. Furthermore empirical study shows that the discrepancy among provinces in terms of financial allocations remained wide.
In order to boost economic growth potentials as well as local business, firstly, we need to construct cooperative systems among local financial institutions and secure niche markets through developing specialized financial- commodities which suit for local business conditions.
Secondly, we continue to drive structural adjustments of resolving non-performing loans in local financial institutions and rearrange postal savings being managed by the central government to protect liquidity outflows to other provinces.
Thirdly, it is necessary to build the credit information system and enhance the credit guarantee system for enforcing the competitiveness of small medium enterprises in local areas.
Finally, given that financial supports for the people and small and tiny businesses in local provinces has been convincingly shrunk since the crisis, the improvement of financial system which satisfies the liquidity demand of most of people in local areas like the Community Reinvestment Act of U.S. is needed.