Research On Formalization Of Rural Informal Finance

The thesis focuses on the formalization of China's rural informal finance (RIF). By summarizing and analyzing pioneers' findings, the empirical frame is established to probe the existing informality of RIF in such different aspects as institution, credit, organization, operation and management as well, which makes it possible to explore undesirable influences resulted from lack of regulating and to find out the major causes of RIF originated from historical background, government polices, institutional factors and farmers' comprehensive quality etc.. Grounded on the analyses and applying methodology of demonstration, exemplification and deduction, the thesis advanced institutional supply to formalize RIF and provided practical policies and options to regulate its development. It argues for the following:Status quo of RIF: RIF has experienced starting, growing and accelerating stages; RIF accounts for 1/3 of rural finance with eastern and western China outweighing middle China in terms of its capital size; The interest rate(IR) of RIF is characterized by comparatively high IR, diversity of IR payment, and syntheses of IR-dependent factors.Informality of RIF: Institutional informality leads to ambiguous property rights, administrative interference, and deceptively high IR; Informality of credit invites surging risks and potential fraud because RIF has narrow credit usually supported by consanguinity, popularity, or locality of people, which enjoys advantages in small scales while suffers risks when expanding; Organizational informality, including lack of registration, office building, staff members etc., tells against protecting depositors and disposing assets; Operational informality due to lack of scientific management tends to trigger irrational loan-deposit ratio, credit speculation; And patriarchal management, arbitrary, low-level, and highly dependent on personal experience, becomes less and less competitive with the expanding of RIF.Affects of Informality: Informality of RIF arouses potential risks and shakes financial stability; RIF undermines the whole financial system as informal sectors, one of the major components in rural financial .market, expel formal ones and stand in the way to real commercial finance in rural areas; Informality of RIF burdens rural enterprises whose financing heavily relies on RIF; Additionally, unregulated RIF gives birth to social problems such as the growing number...