The Legal System Of Private Financing International Comparison And Reference

Because modern legislation's ignorance and lacking of foresight, informal finance has not get proper legal growing environment in china. However, it grows increasingly strong in the small room between limited formal finance supply and large fund demands. During the Two Sessions in 2007, the legalization of informal finance and the difficulties in small and medium scope companies collecting money became hot topics. To establish a set of effective regulations in a short period, studying the history and legislation of informal finance in other countries is a valuable means.Informal finance is defined in various ways in different scholars'works, because their investigate angles are different. These definitions of informal finance sound similar to a large extent, because they are commonly made by comparing with formal finance. Informal finance is usually defined as a kind of financing activity that beyond the government policy control, corresponding with the formal finance and aiming for raising money. Informal finance exists mainly in such forms as informal money-lending, Rotating Savings and Credit Associations (ROSCAs), illegal bank, privately offered funds, mortgage and collecting money openly from public etc. It is necessary to distinguish Informal finance from collecting money illegally. Informal finance in this thesis is a legitimate way to collect money, and the illegal ways are commonly not authorized by law or the related governmental departments. Illegal financing is different form the informal finance. The prime emergence of informal finance is helping people get enough money in their daily life when they need finance suddenly, helping enlarge the production scope of small and medium-sized companies. Such effective way of raising money satisfies the non-public companies'demands, supports the progress of GDP, improve our finance system.The emergency of the informal finance is related with the limitation of formal finance, the booming development in nongovernmental businesses objectively promotes enormous demand of financing. But the tradition that formal finance would not like providing loans for persons or small and medium scope companies, whose credit is not perfect, promote the informal finance enlarged increasingly. The informal finance in the developed countries appeared earlier, legislations and institutions about it are comparatively complete. In 1850, Herman Schulze-Delitzsch and Friedrich Raiffeisen established the relatively complete informal finance system mode——credit union system in Germany. After that, such systems are established continuously in its neighbor countries. Britain is the birthplace of the modern cooperation cause (its credit union system emerged later than Germany).The representative informal finance forms in England primarily include the Cooperation Wholesale Association (CWS), which became the special cooperative bank later, Trust Savings Bank ( TSB), and Home Loan Association. In about 1920s, credit cooperatives in US obtained developed rapidly, and many organs to supports the works of credit cooperatives established, craft guilds included. In 1934, the Congress adopted the "Federal Credit Union Act", established subsequently the special nationwide credit union association (NCUA), set up supervisory organs or hire full-time officials in every state. In addition, the credit guarantee system and the subsidize policy in US is comparatively characteristic .The traditional informal finance organization in Japan is Mujin, which was reorganized to the commercial bank in 1980s. At the same time, the informal finance system has made a great progress in developing countries. For example, Indian government pays attention to various financing methods , their informal finance organizations primarily include the Minimum Financing Institution (MFI), financial companies without registering, nonprofessional money lenders, all kinds of leasehold companies, investment companies, ROSCAs and so on. In some African countries, the informal finance system has also developed. The informal finance system in Taiwan region of China manifests as ROSCA, which has been provided with mature legislation, and the system promotes economy increase.Obviously, informal finance itself is not bad, if only be used properly, the financial markets will benefit from it, whether in the developed countries or in the developing ones. Informal finance in china has a long history, but its forms never stop changing with the change of economics, policies and laws. Because lacking of legislation, there are many problems exist in it. The government's traditional basic attitude to the informal finance was to suppress its development. Today, facing financing demands' enlarging and weakness of legislation, investigating and analyzing different informal finance systems, find a more efficient and reasonable management mode in order to guide and promote the informal finance expand to the positive directions. We need to change our management style from the suppressible to the supportable, and establish a system according to our conditions, consequently it will serve the economy better. Therefore we should legislate to adjust issues on financing, allow the"illegal"financing institutions such as the private banks turn to legal financing institutions in a given time, which have registration funds, operate by law and perform the contract well. Now central government support some new forms of inform financing organizations work in some provinces, it's a good beginning. Meanwhile we need to pay enough attention on the following problems: (1)Define the legal informal finance specifically.(2) Establish and consummate supervisory mechanism to help the informal finance develops healthy.(3) Constitute laws concerning the informal finance, such as anti-monopoly law and anti-money-laundering law;(4) consummate systems concerning the informal finance, for instance ,to constitute the credit system ,etc.