Research On Underground Private Banks In Our Country

With our country's reform and open policy deepening and market economy development, the financial service demand of our countryside is increasing day by day. But the financial service provided by the regular finance more and more cannot satisfy the demand of the countryside. In the general countryside, the informal finance is extremely common, and the underground private bank, which is an important part of the informal finance, has begun to play an increasingly important role. Abroad, though there are a large amount of research to the informal finance, still lack the deep exploration to underground private banks in our country .The first underground private bank in China appeared in the Song Dynasty, named "money shops" or "silver shops". But the first underground private bank which had the real functions of a bank, appeared in the Qing Dynasty Emperor Qianlong and Jiaqing years, and played a swapping role in civil funds. After the liberation, the banks were sorted out, but they have been constantly rising in the coastal areas and play an important swapping role in civil funds.Broadly speaking, underground private bank is a financial system constituent; it plays the role in certain the domain which the regular finances not doing. This article is based on the theory of Banking, Finance, Institutional Economics and Modern Western Economics etc., to have a research on our country's countryside underground private banks. At the first part of the paper, the following items are involved, such as a brief introduction to the origin of underground private banks, distinctions on some similar concepts, a definition of the meaning of the underground private bank and a analysis on the relation between underground private banks and innovation of China's rural financial system. And then explain the mechanism of the underground private banks' emergence and development as follows, private capital supply situation, financing of minor enterprises, formal financial services in rural areas and so on, and introduce the scale of the underground private banks, organizational patterns, modes of operation.At the same time, this paper explores the relationship between economic growth and informal finance, and analyzes the underground private banks' advantages and negative effects. What's more, analyzes the case of Zhejiang's underground private banks supporting local economic development. The fact proved that, at present, it is reasonable for the underground private banks to exist in our rural areas. Finally, this paper explore the developing direction of rural underground private banks and provide some relevant policy recommendations: determining the recent and long-term tasks of the underground private banks; establishing a multi-level investment and financing system; leading informal finance privatization according to system innovation; in-depth reforms of the financial system; to strengthen special efforts.