Legal Mechanism Construction Of Risk Constraints Of The Rotating Savings And Credit Association

The Rotating Savings and Credit Association(hereafter referred to as ROSCA), as aform of folk financial organization for mutual aiding, due to its high energy,efficiency and competitiveness in investment and financing, exists extensively amongFujian and Zhejiang province, known as “grassroots finance”. In the present situationthat the formal financing channels cannot meet the demand of private capital, theROSCA alleviates the current disparities between supply and demand of credit funds,which cannot be replaced by the formal financial. However due to its spontaneity andblindness, there are huge risks existing potentially in the ROSCA, causing large-scalecapital collapse happened among the areas the ROSCA prevails. As to thisdouble-edged sword, there is currently no laws and regulations to regulate it, whichhas become a big hidden trouble of social and economic development. However thethe current disparities between supply and demand of credit funds, and the increasingfolk idle capital under the circumstance of low bank interest rates, determines thenecessity of the prevalence. Therefore the government should establish an effectiverisk constraint legal mechanism to guide and supervise the ROSCA, to ensure itssound operation, to play its positive role, and to avoid the capital collapse tragedyhappening again. My thesis topic is based exactly on the above thinking, hoping to beable to put forward some meaningful academic advice.On the premise of defining the ROSCA, the first part of this paper elaborates theconcept, related factors and organization form of the ROSCA. The second partanalyzes the reason fo the prevalence of the ROSCA, including its history development, its advantage and economic background, and then explore and analyzesby synthesis the risk and the problem existing it the operation process, combining thecapital collapse event happened in my hometown Fuding City. The last and the corepart of the article first carefully analyzes the legal quality of the ROSCA, and thenfurther clarify the legal relationship among the subjects of the ROSCA, finally putforward the concrete conception of legal regulations to constraint the risk of theROSCA.