Analysis Of The Status And Influence Factors Of China Rural Informal Finance

China is one of the world’s most important developing countries, there are alarge number of agricultural population. Since the16th National Congress ofCommunist Party of China, the issues of concerning agriculture, countryside andfarmers has made a major breakthrough. And there are a major opportunity ofAgriculture and rural. The most important issue among these is deeping the reformof rural financial system,setting up a financial service system for agriculture andfarmers demand, promoting the healthy and sustainable development of ruraleconomy. Although the government has invested a lot of money to develop alow-interest loan, most farmers are still financing from informal channels. In theintroduction part of this paper, the writing background and significance are describedin detail. It is hotly argues in the definition, the reasons and the function of theinformal finance at home and abroad. The research scholars serves as a literaturereview in the part of introduction.There are formal and informal finance in developing countries general. Informalfinance is a indirect finance institution which is engaged in by nongovernmentalfinance without the protection and regulation of government. The characteristics arenon-public and high flexibility.And the main difference is flexibility and theapplication of the loan between informal finance and formal finance.Informalfinance has experienced the untiedloan,all kinds of money shop, native bank fromsimple to complex. Until the reform and opening up, the informal finance has beactive again which was in a depressed state before. Folk loan is become moer andmore important for daily life.The substitution effect of formal finance is inceasing. There are many kinds of informal finance,for example hehui, money shop, the RuralCo-operative Foundations and usury. Tsai diveded the China informal financeinto legal, semi-legal and illegal.The legal informal finance is borrow and impawnindividually, the Rural Co-operative Foundations is semi-legal and usury is illegal.For the economic transition of China，It is important for small private enterprisesthat any kind of informal finance. The contradiction between supply and demand offormal finance make spaces available for informal finance. And informal finance hasbecame more and more widely for its simple,size、cost and term according withcustomer needs. According to the HSBC-Tsinghua survey of the scale of informalfinance in Wenzhou, In20071-10month, the informal finance amount of400households is about107million, has increase of9million and9.5%than thebeginning of2007.In the same year,there are far more informal finance than bankloan. Since the informal finance has be covert and out of the regulation and financialsupervision,it is difficulty to get the direct monitoring data.It is still a aporia toestimate the scale of China rural informal finance.Most of domestic scholars do thisby calculating survey data.Although there are not a common conclusion of the sizeof it, it is widely believed that it is a big one.It has impacted the development ofinformal finance that there is not any laws or supervision.Informal finance have different levels of development in many countries andregions.This can be some reference and inspiration for China rural informal finance.The United States and Japan are examples as developed countries.The informalfinance of America maintains a good momentum of development by thegovernment’s strong support,and plays an important role in the economic and socialdevelopment. While the Japanese informal finance has a long history,it is absordedby formal finance and lose its independence for excessive intervention bygovernment. Grameen Bank in Bengal is a successful example for developinginformal finance.The lesson for us is to explore an informal financial organization based on china’s national conditions. The informal finance of Taiwan isincomparable in the depth and breadth.There are many reasons contribute to thissituation.There is very close relationship between economic development andinformal finance.The experience of Taiwantells us that informal finance, underspecification and supervision,can make a contribution to economic development andsocial stability.In rural China, financial repression and financial exclusion phenomenon is verycommon especially in the northeast. Informal finance emerge as the times require.Informal finance is in an important position in many rural areas of developingcountries. Scientific analysising the influence factors of China rural informal financeis good for formulating relevant policies reasonablly, improving the efficiency ofcapital allocation, promoting the healthy development of China’s agriculture. Thisarticle analysis the survey data of804farmer households in Jilin Province one of thebiggest province in China in2010. It shows that the informal finance is widespreadin the rural areas of Jilin province for30%of the target farmers taking part in it.Thenmake a conclusion by analysising the natural condition, balance and composition oflending of them. Choose26most likely effects of informal finance the threeitems,and make the OLS estimation by using EViews6.0software.The conclusion isthat total household expenditure, wage income and the amount of household land arethe most important influence factors of China rural informal financeThe interest rateof informal finance has no matter with the scale of it.There are still no matter withthe loan of children’s education and medical treatment,although these two are a largeproportion of loan.Finally, according to the development experience of informal finance in othercountries in the third chapter the and the conclusion of econometric analysising forthe influence factors of informal finance in the fourth chapter, put forward policysuggestions to government. It hopes that government can make a reasonable plan of informal finance, and informal finance make contributions to the development ofrural economy and social stability in China.There are two aspects of policysuggestions.The first is regulations. Formulate laws and regulations of informalfinance and supervision mode. Nothing can be accomplished without norms andstandards. Informal finance can healthy developmeng after overcoming the negativeinfluence of it. The second is supporting.1. optimal allocation the rural laborreasonably, continue to encourage local employment.2.vigorously promoteagricultural policys, reduce household expenditure.3. stabilize the prices of grain,reduced the cost of tillage.4. distribution the land reasonably, reduce the burden offarmer. Informal finance will develop quickly with the support of government,willmake contribute to the great revival of China.