Legal Analysis Of Folk Financial Change Into Shadow Bank

Affected by the system of repression and traditional financing culture, there are two mutually segmentation of china financial markets, the formal financial markets and the private financial markets. The rapid developent of folk finance to make up the gap in the field of which the formal finance financing real economy.Especially folk finance play an important role for the development of private enterprises and small and medium enterprises. But folk finance is spontaneous, decentralized and blind financial activities, which itself has a vulnerability and high risk.Folk finance long-term free in the financial regulatory system, when the regional risk events have occurred and adversely affected to the financial security and social order. How to regulate folk finance has been a hot issue discussed in academic and practical sectors. In recent years, with the expansion of folk financial scale, increased the degree of organization, especially in conjunction with the Internet and folk finance, so that private finance has some new features. Thus the study of private finance can also stay on top of the traditional form, but the need to observe the new features of folk finance, accurately grasp the development and trends of folk finance.Study of folk financial phenomena and problems from the following five aspects:The first chapter describes the phenomenon of the folk financial change into shadow bank. In recent years, folk financial organizations in the form of financial innovation and development, prompting outside the formal financial system, there has been a large number of folk financial organizations and financial intermediation activities,these intermediaries play a traditional bank credit intermediation function,but not with the banks subject to the same degree regulation. They have the conversion feature of maturity, liquidity, credit risk transfer and high leverage, and may lead to systemic risk and regulatory arbitrage, which conform to international organizations shadow banking criteria, can be considered as the shadow bank. Shadow banking in China’s folk financial market, both from financial innovation to catalyze folk financial market, but also the result of the existence of financial repression. Folk shadow banking finance has the dual role of both positive and negative, which can either improve the financing environment, increase the availability of financial services; it may also lead to regional risks, endangering the safety of the financial system. folk financial change into shadow bank should be an objective evaluation, we can not view them as a scourge, and not turn a blind eye.The second chapter analyzes the legal nature of folk financial institutions play the shadow banking functions. Due to the different stages of development in which the financial performance of shadow bank in the form of various countries.Unlike European countries, many financial institutions comprising a plurality of shadow banking system, include money market funds, investment banking, risk dispersion and increased leverage activities around the securitized credit intermediation system, Chinese-style shadow banking is relatively independent, did not form a complex system. Play shadow banking functions from our commercial bank mode, due to the interest rate market is not yet complete, the expansion of its essence remains the shadow banking is a service of the real economy, relatively pristine credit expansion mechanism, the main function is to copy the bank fuctions of savings and loan business, more is to serve as role of supplement bank financing. The lack of variety of existing laws and the activities of private financial institutions accurate positioning, resulting in many folk financial institutions engaged in the legal nature of the shadow banking activities is still in pending status. On the basis of the legal nature and therefore the need for a typical traditional and new private financial institutions presented on shadow bank. The legal nature of financial institutions according to business boundaries they are engaged in, as well as its own law nature of those institutions.Legal boundaries clearly illegal fund-raising and folk financing between normal and appropriate to consider relaxing the standard definition of illegal fund-raising, to the innovative development of folk financial institutions and the "trial and error space."The third chapter describes the mechanism of private financial risks of folk financial which change into shadow bank. Traditional folk financial risk with the financial markets in general, but for a long time did not burst into the larger risk, mainly dependent on its own particularity, traditional folk possess intrinsic financial guarantee contract enforcement mechanism-the reputation of restraint mechanism, but also by adjusting the folk customary law. But private finance leads to the collapse of the shadow banking traditional folk trust structure, the social basis of private finance from the "social acquaintance" to "strangers".Shadow banking functions not only bring the same risk with the traditional banks to folk financial institutions, for example,it have liquidity, maturity mismatch and other types of risk, but also led to the emergence of new private financial market risk:systemic risk and regulatory arbitrage. Under the influence of multiple risks, folk financial market failures rely on their own private financial constraint mechanism is difficult to solve, the traditional private law norms revealed the inadequacy of financial systemic risk and regulatory arbitrage, regulators have necessity.The fourth chapter proposes folk financial change into shadow banking brings regulation problems.Folk finance change into shadow bank lead to the characteristics of China’s financial market structure transform, while bring the impact and challenges to financial regulatory system. By viewing folk financial regulatory system, in the long term financial regulation emphasize security while ignoring market efficiency and freedom, regulatory idea guidance of folk financial regulatory system. Meanwhile, China’s regulatory model can not meet the require of folk financiall institutions, and even non-financial institutions engaged in financial activities. Timely financial regulatory system needs to keep pace with financial innovation and regulatory practice on shadow banking in other country can provide meaningful reference. Shadow banking supervision of private finance raised demand, we should comply with this regulatory requirement, sought in the context of the development of the folk finance, provide better regulation rather than more stringent regulation. At the same time,regulators should pay attention to the role of market discipline, focus on centralized supervision to prevent systemic risk and regulatory arbitrage.The fifth chapter designed the folk financial regulatory system.Folk financial regulation is an important ways to prevent risks, and standardize our folk financial markets. Folk financial regulatory system design firstly should determine the appropriate regulatory principles. Second, we must clear regulatory thinking, regulation of private finance to play both legal and regulatory functions, but also focus on the role of self-regulation, a reasonable set of regulatory boundaries of folk finance. Again, the private financial regulatory focus should focus on systemic risk and to prevent regulatory arbitrage, if not completely eliminate systemic risk, can also reduce leverage private financial institutions, to improve the liquidity and other means of avoiding or reducing the consequences of the crisis crises. Finally, the establishment of micro-prudential supervision system of private financial institutions, thus purifying the private financial markets to prevent private financial crises and systemic regional crisis.