The Improvement Of Supervision In Private Lending

With the development of market economic, the modem financial system has been improved a lot. Meanwhile, not all formal financial system can fully meet all the needs of the financial markets. Current financial system of China does not satisfy all the financing needs of SMEs and the public. The public and companies who have surplus funds need to find ways to invest their money. In this way, private loans become an good choice to them. In recent years, private lending becomes unusually active and a hot issue within the community. Making contributions to economic development and formal finance, especially small and medium-sized private enterprises.However, because of irrational behavior and lack of management and guidance, the development of private lending reveals many drawbacks and deadly strict financial controls and so on.Private lending itself has some weaknesses that it can not overcome, such as it is difficult for government to manage it and its capability to anti risk is relatively weak and so forth; A lot of risks turn up, while the stability of the financial markets has been greatly influenced owing to lack of supervisor and laws. Strict suppression of private lending is not good for financial deepening and push the private lending to the edge of illegal to a long term. Despite of some shortcomings, together with formal finance its active role in allocation of resources, promoting economic development has played a certain role. Gradually, the state begins to pay attention to its development, although it is a little bit late. In all, guiding private lending into standardization and legalization and improving supervision system become an urgent issue.This paper explains the background and significance of the topic, and the research method. On the basis of current situation and need for its regulation, defects and causes have been analyzed. With the experiences of supervisor in typical country and region, several suggestions have been made. This paper is divided into four parts.The fist part is an introduction. The question about private lending has been putting forward. It summarizes the structure, research method and significance of the topic.The second part gives a describe of current situation of private lending and need of supervision. Existing forms are summarized by defining the concept of it. It acquainted us with the current situation of private lending through its two characteristics, which are scales and extend of development. Contrasting positive and negative aspects of private lending, the need for supervision has been concluded.The third part is about the defects and causes of regulatory. Legal system is imperfect, because the government has strict controls on the private lending. Tracing to its source, real causes are general objectives bias of the government financial regulatory and the old concept of it.The forth part is the most important one. It explains the ideas and measures which can improve the regulatory monitoring system. With the defects and causes mentioned above, and experiences of Japan and Taiwan, three parts are involved in perfecting our private lending supervisor system. Fist, the innovation of basic idea of private lending system; Second, the innovation of legislative proposals of private lending; Third, the innovation of monitoring system of private system.The research on private lending is really complicated, incompleteness is inevitable. For example, there are limitations in acquiring direct data, thus reliability has been questioned. Several policy recommendations are made based on theories, experiences, cases and popular problems. Although the study is inadequate. However, hope that it can give help to future development of private lending.