Analyzes Of China's Informal Finance In Institutional Economics

The economic development brought financial system and financial organizations, which kept evolving with the economic development, and kept providing service for the substantial economy. After the economic reform, the centralized financial system was loosen, multi-financial system was constructed. However the informal finance has been excluded by this system up to the present, and been left in an ambiguous state. Whereas, informal finance survived and showed its power more and more distinctly.The development of China's informal finance, which has profuse forms, is a typical institution change in China's marketlization. Include rotates, private loans, underground banks, private funds, every form of the informal finance has its unique operation mode and characteristics. The appearance of these private financial form have deep institutional reason.Institution disequilibrium brought institution change. The development of china's private sector economy and narrow finance channel was the main reason of the appearance of the informal finance. After the economic reform, the private sector economy expanded and became the main power of the domestic economy growth. Not matching its economic status, the finance channel to the private sector economy was extremely narrow. The inside finance couldn't satisfy its need of development, and the outside finance was discriminated because of the ownership form. The only way out for the private sector economy was seeking fund out of the legal system. This was the fundamental causation of the institution change. On the contrary it proved the important contribution of the informal finance to both the private sector economy and the whole domestic economy. Economization of the transactions cost provided by the informal finance is another foundation which support the existence of the informal finance. In many aspects such as information cost, current tendency, degree of organize professionalization, the informal finance was more fit for the level of private sector economy development. Therefore, the informal finance was...