On The Risk Restraint Mechanisms For Mutual Bidding ROSCAS

Bidding ROSCAS (Rotating Savings and Credit Associations ) is an important form of the folk mutual finance in China. It has relatively good efficiency, vitality and competition. Bidding ROSCAS improves the total welfare of the people who restricted by the formal finance. It cannot be substituted by the formal finance in county's economic development. But at the same time Bidding ROSCAS is spontaneous and original ecological, and it has huge potential financial risks, which results large-scale collapse incidents of ROSCAS in the more popular areas. The urgent need to resolve now is how to establish the effective risk restraint mechanisms so that the health ROSCAS will continue to operate to play its positive role as far as possible and avoid the collapse occurrence. I would rather choose Fu'an in Fujian,where ROSCAS is very prevalent ,as the sample for research.As the topic will be the risk restraint mechanisms for Mutual Bidding ROSCAS , the paper will first clear the nature and mode of operation of ROSCAS, distinguish between Mutual Bidding ROSCAS and Speculative Bidding ROSCAS , elaborate the main contents of the risk restraint mechanisms of ROSCAS, then elaborate the features of Game Theory about ROSCAS. On this basis, to a healthy survival ROSCAS of Fu'an for a sample , the paper first analysis the reasons for its successful operation, and reveals its successful experience of effective risk restraint mechanisms from the perspective of Game Theory , then select three typical cases of collapse ROSCAS and analysis its failure risk restraint mechanisms , also from the perspective of Game Theory . Finally, The paper proposes specific measures for the establishment of the risk restraint mechanisms for Mutual Bidding ROSCAS, including: 1 .Establish strict internal risk restraint mechanisms: reducing the income of default.2.Create sound external risk restraint mechanisms: increasing the costs of default.3.Prohibit Speculative Bidding ROSCAS.The innovations of this paper are: the discussed perspective is innovative for the paper focuses the establishment of effective risk restraint mechanisms for Mutual Bidding ROSCAS on the main line launched; the discussed ways are more creative innovation for the paper analysis the risk restraint mechanisms for Mutual Bidding ROSCAS based on the quantitative analysis of Game Theory methods.