China should tighten its supervision of the micro-finance industry to guard against risks to financial stability, Chinese news outlet Caixin reported China central bank vice governor Chen Yulu saying at a Beijing conference on Thursday.
Chen’s comments come after the country’s banking regulator on Wednesday released detailed rules to curb an unruly peer-to-peer (P2P) lending sector, underlining China’s commitment to the clamp down on a sector riddled with runaway managers and pyramid schemes.
Microfinance has grown quickly in China, driven by demand from cash-starved small- and medium-sized enterprises who are turned away by traditional lending institutions that lean towards risk-free state-owned enterprises. P2P firms are microfinance companies.
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