Legal Study On Folk Loan In China

As an important way of capital financing, folk loan plays a positive role tooptimize the allocation of financial resources, enhances the self-adjustment andadaptation ability of the economic operation, promotes the formation anddevelopment of the multi-level credit market. But because of lack of attention tofolk loan from China’s legislation system, the legislation about folk loanseriously lags behind the requirement of economic development. It leads tomany social problems and unhealthy phenomena about folk loan, brings theunstable factors to the healthy and stable development of our country’s economyand causes a lot of bad social influence. Therefore, on the basis of summarizingthe folk loan theory and law, if we can puts forward legal rationalizationsuggestion by comparing and refer to the foreign advanced legislationexperiences, it will unquestionably have important academic value and practicalsignificance for developing and perfecting the socialist market economy systemof China. Direct at the various phenomena and problems of folk loan in presentsociety, the thesis explores the definition and causes of folk loan, analyzes thefolk loan types and their characteristics and summarizes the present situation ofthe legislation on folk loan. At last, the thesis puts forward legal advice onnormalizing folk loan.Besides the introduction and conclusion, the thesis divided into four parts.The first part is about the definition and causes of folk loan. The partdiscussed the basic theories of folk loan from two aspects of the definition andcauses. The main body of folk loan is a natural person, corporation and otherorganizations, but the lender and the borrower can not be corporation or otherorganization at the same time (That is, corporation or other organization shallnot lend to each other). Behavior patterns of folk loan are bypassing governmentformally approved the financial system and do financial trading activitiesdirectly. It’s connotation contains that in folk loan capital property rights belong to the folk and financing activities is not regulated. At the same time, throughthe analysis of the causes of folk loan, the thesis points out that theprevailingness of folk loan is caused by Financial Repression, is the combinationof the huge gap between Capital supply and demand caused by irrational socialfinancial resource allocation and the needs for investment channels after folkcapital accumulation.The second part is about the folk loan species and their respectivecharacteristics. This part analyzed folk loan’s common types from theperspective of folk loan’s classification, deepened the understanding of folk loanfrom the point of view of reality and legal. It distinguished the folk legal interestrate lending and folk usury lending from whether beyond the legal interest limit,distinguish the organized folk loan and no organized folk loan from whetherunder organizational control, distinguish the natural human folk loan andinvolving enterprise folk loan from the deference of main body. In theclassification process, it analyzed usury, Wenzhou’s Chenghui mode and othersocial phenomena.The third part is about present condition of our country’s folk loanlegislation. This part summed up characteristics of our country’s folk loanlegislation through the arrangement China’s laws and regulations related to folkloan. The characteristics are Lack of a clear legal definition of folk loan,roughness and fragmentation of，conflict and understanding differentiation oflegal rules about folk loan, lag of Legislation behind new situations and newthings.The fourth part is thinking and suggestions about improve the legal systemof our country’s folk loan. This part is the core of this paper. There is reflectionand prospective about how to establish and perfect the legal system in view ofChina’s concrete conditions and foreign legislative experience. First of all, thepaper made clear our country should reflect on legislation goal of folk loan, the planned economy time concept should not guide the legislation of folk loan inmarket economy era. Secondly, the legal concept of folk loan should be clearlydefined in the civil legislation. Stipulating the legal range of folk loan has acertain role in guiding to regulate folk loan behavior. Thirdly, the paper believesthat in the current situation the most necessary measure about improving legalsystem of folk loan is that the supreme people’s court uniformly makes a moreupdate and more comprehensive judicial explanation to solve the problem ofconflict between laws and regulations and legal understanding contradiction.At last, this paper focuses on the usury problem. It recommends change theambiguous attitude on usury to a clear position against usury. At the same time,it suggests to establish a legal responsibility system against usury. Usingpunitive civil compensation and criminal punishment measures to investigateusurer can effectively contain usury.