Study On Legal Regulation Of Private Lending In China

In the context of China’s rapid economic development, private lending, as a non-commercial bank financing channel, has sprung up. It greatly complements the insufficient funds in the sectors of private economy and rural economy. However, due to long wandering in the edge of financial regulation, private lending has exposed a series of problems in the actual motion such as higher yield, easily turning into financial crimes and severely disturbing the national financial order. The legal root lies in the lack of well-established private lending system. Therefore, on the basis of analyzing existing legal risks and regulation dilemma of China’s private lending, this paper takes private lending regulatory experiences of the United States, Germany, Japan and other countries as a reference. Then, combined with our national conditions, it proposes an overall picture and specific system conceptions to clear the legal status of private lending, refactor folk lending regulation principle, and safeguard the sustainable development of private lending in accordance with the law.It also puts forward recommendations to unified legislation, strengthen the legal supervision, and establish risk prevention mechanism and information disclosure system.This paper firstly defines the private lending and then makes distinction with several similar concepts. Meanwhile, in terms of positive effect, it evaluates private lending’s positive influence in meeting the demands of SME financing, making up the formal finance, optimizing resource allocation and other aspects. In terms of negative effects, it evaluates the negative influences in national macro-control, enterprises’ debts repayments, banking risk preventions and other aspects. Secondly, based on the overall review of our private lending regulations, aiming at the negative effects of private lending, this thesis analyzes in depth practical difficulties of our private lending legal regulations such as blurred law, lagging legislation, conflicts of legal provisions and others. Then, this paper, from five aspects, analyzes and compares the legislative practices about private lending’s legal regulations of relevant countries like the United States, Germany and Japan. The five aspects include legal identification of private lending, interest rates control of private lending, lending regulations among enterprises, regulatory mode and risk prevention of private lending. Based on analysis and comparisons, it combines the regulatory difficulties of our private lending, and summarizes lessons from foreign legal regulations of private lending. Lastly, this thesis puts forward to a general picture on legal ideas and specific measures, which aims to guide its reasonable development and regulate its legal development through improving legal system.