Informal Finance's Formalization

Non-formal finance is a significant problem we focus on. Along with the economic crisis, the importance of informal finance draws our attention again. The research abort non-formal finance has involved various faces, including the meaning, causes, effects and its development trend. After analyzing all these aspects, this thesis found that grasping the development trend of informal finance is very important to make more appreciate and voluble strategies.The directions of development of non-formal finance are three types: death, maintaining and regularization. We use Coase's interactive method, the theory of institutional change and groups'game to demonstrate the importance and possibilities of regularization of informal finance. From the point of the Externalities that the informal finance's regularization brings to the major stakeholders, informal finance's regularization is the in accordance with the principle of social cost minimization and benefits maximization. From the point that various interest groups pursue profit, informal finance's regularization is the result of their choice under the profit-driven considering. On the one hand, the huge profit promotes informal financial bodies to regularizing positively; on the other hand, other interest bodies support its regularization dues to the interests, pressure and its own power. This makes it is possible that the two subjects may reach a consensus. But from possibility to reality is not smooth. Therefore, this thesis considers the difficulties and the corresponding solutions further. At last, using an example of informal finance to show its role in the economic development, what problem it faced and what we should do in the process.