Perfection Of The Legal System On Folk Financing Legal System Of Chinese Small And Medium-Sized Enterprises

Compared with the financing demand of small and medium-sized enterprises which increase year by year, the power of provider’s financing service seems much weaker. No matter the financing service is provided by financial institutions or folk finance, it is very difficult to meet the financing demand of small and medium-sized enterprises. Folk financing of small and medium-sized enterprises refers to the demand of their business. These enterprises will turn to informal financing channels when it is difficult for them to raise capital in national legal financial institutions, and this is called folk credit. At present, China has not established special legislation for folk financing. The definitions of folk financing and illegal financing are not clear. Due to the deficiency of folk financial regulation system, China lacks timely and effective regulation. Except for enterprise scale, the financing difficulty of Chinese small and medium-sized enterprises includes the lack of financial market influence, small national policy support, nonstandard folk financing, etc.This paper mainly studies the folk financing legal system of Chinese small and medium-sized enterprises. The content includes the overview of folk financing theory of small and medium-sized enterprises, the legislative and judiciary status of folk financing of small and medium-sized enterprises, the deficiency of folk financing in legal system and regulatory policy, the root cause of financing difficulty of Chinese small and medium-sized enterprises, the study on legislation of foreign folk financing, etc.In order to solve the folk financing difficulty of small and medium-sized enterprises, the relevant legal system should be improved in China. On the perspective of legislation, a law of special folk financing should be made and the legal system of folk financing needs to be improved. The law of folk relief of small and medium-sized enterprises should be established to increase the relief efforts. Besides, the guarantee law of folk financing of small and medium-sized enterprises needs to be established, and legal system can be applied to confirm the condition of folk financing of small and medium-sized enterprises. China should pay attention to the system reform of folk credit and perfect the legal system of microfinance market. And it is also important to strengthen and establish relevant financing system of small and medium-sized enterprises. Moreover, innovation funds and direct financing market should be established to support these enterprises. The improved legislation of stocks and securities market can broaden the financing channels. Folk wisdom can be made full use to develop new mode of folk financing. In conclusion, China can solve the folk financing difficulty of small and medium-sized enterprises by improving regulation mechanism and legal regulation of folk financing of small and medium-sized enterprises as well as credit guarantee system of folk finance, establishing special governmental agencies.