Study On The Legal Supervision Of China’s Folk Loan

China has always been famous for its long history. With the gradual development of the economy,an informal private financial activity, private lending, also appear in our lives.Especially in a new century,the impact that the growing size of the private lending brings to China’s economy also continues to deepen, and it plays an increasingly important role.Private lending will take a positive part in China’s economy,as well as a negative one. On one hand, its development activated lending market originally monopolized by the formal financial institutions, made up for backward mode of formal financial market, and brought in more funds into the market through its advantages to stimulate the formal financial trade’s rapid development.On the other hand, due to the the high speed development of the the private lending, along with lack of sound monitoring system corresponding with footsteps of the times, the existence and development of the private lending weakened the macro-control efforts in some extent, which buried great risk in China’s financial system.There are two reasons for that.First,in the beginning, our nation is in the monopoly position in the financial field. Also, with the development of the market economy, China’s financial system,existing more or less drawbacks, can not keep up with the pace of the times.Second, the many strict credit requirements prescribed from banks for its own interests, as well as the bank itself asymmetric credit information, makes the small and medium enterprises or micro-enterprises,which are in urgent need to develop, under the condition of information gathering cost, find the other ways out to solve the problem of insufficient supply of capital in the business.The emergence of private lending, no doubt gives a direction for these enterprises.Thus,they have to choose private lending to borrow funds.Although this emergence solves some problems, but the informal financial market bubble continues to expand, and quickly formed a trend of expansion. However, our lack of a relatively non-formal financial supervision, which makes this non-formal financial system, including the private lending, confused and rapidly changing.The chain of such funds is also more and more vulnerable.If broken, it will become a serious financial crisis, and influence China’s economic development.The focus of this article is to analyze the private lending’s impact on the financial markets in China, and explains the primary cause of such impacts and solutions strategies. Compared with foreign private lending at the same time, learn from their advanced experience and methods, and propose recommendations to improve China’s private lending regulatory system by combining with China’s current economic model.The main point is to analysis the effect that produces on the financial market and it’s basic reason and solution. Meanwhile, making a comparison with the foreign folk loan, we import the advancing experience and method.As well as,combining with the present economic development pattern gives the suggestion of improving the regulation of the China’s Folk Loan.