Study On Improving The Regulatory System Of Private Lending

In recent years, private lending activities are extremely active, sothe issues of private lending has been hot topic in financial, even thewhole society. Private lending has always been outside the presentfinancial system of our country, and to some extent, it plays a role inpromoting our economic development and financial reform. However, itspotential negative effect has always existed. That s why we should leadprivate lending up on the board, construct the regulatory regime to guidetheir healthy development, making best of its advantages and bypassingits disadvantages. Starts with the definition and characteristics ofprivate lending, combining with the necessity of its existence andsupervision, this thesis tends to explore the defects in and causes forthe regulatory system. On the basis mentioned before, this thesis alsoaims to put forward specific recommendations to improve the regulatorysystem of private lending. This thesis consists of four chapters.Chapter One is dedicated to the definition and characteristics ofprivate lending. The necessity of existence and supervision is alsoanother aspect to explore. By comparing the domestic authoritydefinitions of private lending, the current dominant forms are summarized.Through the analysis of the characteristics and necessity of existence,it is concluded that private lending should be taken on the sparse butnot forbidden. By demonstrating the negative effect of private lendingand the positive effect of its regulatory system, this chapter comes upwith the judgment that the supervision is necessary.Chapter Two conducts an exploration of defects in and causes for theregulatory system of private lending. The defects mean the overregulationof government, the imperfection of regulatory system and the absence oflegal regulation. To trace the origin, there are several reasons, suchas the control deviation of government goal, the lack of capacity ofsupervision and the limit of lending subject s own factors.Chapter Three raises a way to improve the regulatory system of private lending, mainly in three aspects: deregulation, the strengthening ofsupervision and changing regulatory philosophy. On one hand, thederegulation would allow private lending to take part in the competitionof financial markets, making the best of its advantages. On the other hand,the supervision should be strengthened in order to avoid its negativeeffect. At the same time, the regulatory philosophy should be changed tobecome more suitable for the economic development. The last puts forwardspecific recommendations to build a sound regulatory system of privatelending from four main aspects: to clarify the regulatory subjects andobjects, the entry and exit mechanism of private lending markets and toperfect the risk warning and handling mechanism.