The Status Of The Chinese Civil Financial Reasons And Development: An Institutional Analysis

Nowadays, in china private firms' contribution for whole macro economy is bigger and bigger, which private economy's proportion of GDP and great effect of private firms absorbing labor can verify. While finance system cannot give sufficient support to private firms which should do it, and many funds are invested in inner-system economy which is low efficiency. Facing the large money scale, eager demands for capital lead to birth of informal finance that gives private firms expedite finance channels and help them solve the problems of money insufficiency.The form of informal finance is diversiform, which mainly include ROSCA, private loans, private funds, illegal banks, private banks and so on. The paper detailedly analyzes meanings of main forms of informal finance, operation laws and what is better than other kinds of finance, and then discusses some typical cases.As for the different forms of informal finance being very important for Chinese economy, why informal finance can be bom is also very worthy to study. This paper opens out the reasons why informal finance came into being from the system angle. Chinese private firms, especially small and middle scale private firms face serious difficulties of finance, but at present finance system cannot meet the demands of them. The disequilibrium of finance system supply causes huge profit, and new system will be created to share the new big profit. Informal finance is just the innovation of new system. At the same time, local government's character of "rational-economic man" let it take part in system vicissitude actively, winch is the key factor of promoting system innovation of informal finance. As for an innovation of system arrangement, informal finance decreases system vicissitude's cost greatly. It also gives pressure to former finance system, which leads to active effect for improving finance efficiency and establishing good credit system.mfonnal finance is the certain selection of Chinese finance system vicissitude and it relates to healthy development of Chinese economy and finance, but in true economylife, government is not kind to informal finance. It is not accepted or supported by government, even restricted or forbidden. Though informal finance has many defaults because of its own operation style and corporation construction, such as hard to be supervised by government, easy to be controlled to commit a crime, low capability of resisting risks because of its small scale, the more problem of informal finance is exactly caused by government's wrong supervision even direct control. Government should respect the natural innovation, more depend on market to determine the way of informal finance development, provide a stage of au pair competition, give informal finance citizen treatment, quicken up opening finance section to private capital, and lower the obstacle of admitting new firm to finance market. At the same time, because of informal finance's inherent default and strong outer effect of finance system, supervisor should strengthen supervision of informal finance, establish risk preventive system and deposit insurance system, to offer all-around service system.