The Analysis Of Pros And Cons And Countermeasures Of The Development Of Chinese Folk Financing

Folk Finance has maintained a long history in China.It has a huge scope and regionaldifference,existed in different kinds of modes,whick meet the requirement of people from every aspect.Thedevelopment of folk finance is caused by history necessity.At the early time of China’s economicdevelopment,it made a significant contribution to the development of non-public sectors of theeconomy,private enterprise and the whole social economy.Folk finance help solving the problem of minorenterprise’s capital raising when the formal finance is lack of funds,and optimizing the allocation ofresources to help the minor enterprise.In the contryside,folk finance provide microcredit,help solving theproblem of poverty and the difficult of production.At the same time loan out for famers to do theirpoineering work.,which is really meaningful.Folk finance is related to formal finance.Firstly,formal finance may feel under stress of folkfinance.Folk finance is flexbility.It has high interest and a big elasticity.It collectde amount of civil idlefunds and took more and more large part of financial market share.At the same time,helped the formalfinance for it’s oneself reform： improving the management efficiency,expanding the scope ofservices,riching product type,promoting perfect and covering the shortage of formal financial system.Under the decided advantage of folk finance,we also have to find out it’s shortage.One hand,thehuge mass of capital is out of formal financial system,which is difficult to calculate it’s number and controlit’s purpose,which producing great diffuculties for macroeconomic to control.On the other hand,folkfinance itself is lack of the regulation and supervision of law,operation irregularities and high risk.Easy tobreed the illegal and criminal activities,broken the economic order driven by interests.Not only in our country,folk finance is developing well in other countries and regions.This paperanalysis the reasons of the successful of folk finance in Taiwan and The People’s Republic of Bangladesh.Learn lessons from them and conteasted to China’s actual conditions,looking for a suitableway for China’s folk financial survival and development.So what kind of way is suitable for the development of folk finance?Wenzhou gave us ananswer,we hoping that our folk finance can find a right way during this reformation.At the end of thepaper,I put forward some suggestions for the development of folk finance of China.The folk finance needslegalizating and standardizing. firstly,folk finance needs legal status.We should be equal treatment for folkfinance and formal finance.Secondly，folk finance also need a special treat.Folk finance should developedfreely,overcontrolled may make it lost it’s advantages.Thirdly,provisions of folk finance should be made bylaw.To structure the market access and exist system,to standardize operating system,to supervise the folkfinance by specialized regulatory agency. At the same time,set up the deposit insurance system andguarantee system.Only with the equal treatment,benefucial policies,the legitimate status and appropriateregulations can folk financial thrive and become supportive to economic development.