On The Financial Regularization Of Rural Folk

This paper studies the rural informal (non-governmental) finances and their ways to formal finances. The rural finances have made progress greatly owing to government's reform since our county's reform and opening. But the demand of the financing always overpasses the supply in the rural area. For the factors in history, law and society, etc., most of the rural informal finances are not authorized by the law, which limits the effort of the rural informal finances.Traditional financial regularization is defined only in the legalization. This paper gives a new definition to cover not only the legalization and standardization, including the perfect financial system, as well as the enhancement of the internal management of the informal financial organizations.This paper analyzes the financial status of the rural informal finance, estimates the size of the finances, and discusses their form and characteristics. In our country's lending activities, informal finance is far greater than the formal financial. At present, informal finances includes non-governmental lending finance, private banks, pawn, private fund-raising, rural cooperative foundations, and other forms of micro-credit. They are mainly characterized by relatively high interest rates, flexible lending mechanism, regional characteristics. However, they lack legal basis, organizational systems, with the management confusion, the credit activities of non-standard, and the single-service.It is necessary and feasible for rural informal financial to be standardized and regularized. The rural informal finances meet the necessary capital supply for the rural economy. The reform can alleviate the rural systemic financial self-risk, improve the efficiency of private finance, and is conducive to the achievement of the objectives of macroeconomic policy, which is conducive to long-term development of the rural economy. The feasibility of the regularization lies in the financial inhibition and financial deepening, and institutional change.This paper adheres to the overall direction of financial deepening and liberalization. Improve the legitimacy of the rural informal finances, build a broader system of financial forms, develop insurance, guarantees and other financial business, lead private capital to participate in the regularization of the rural informal finances, stimulate the development of bottom-up model. Meanwhile it is necessary to build government regulatory organizations and industry self-regulatory organizations, such as multi-level system of financial supervision and managementThis paper argues that the rural non-governmental financial regularization is feasible, through the legalization and formalization to achieve standardization of the rural non-governmental finance, and give full play to the role of rural informal finance.