The Legal Regulation Of Chinese ROSCA

The Rotating Savings and Credit Association(Abbreviated as ROSCA) is a mode of informal financing which has a long history and widely distributes in many places of the world. In ancient and early modern times, it had a positive effect in helping one another in bettering life in rural communities, and even nowadays, it’s still playing a significant role in configuring people’s redundant cash resource, offering solutions to those who need to invest and finance and promoting the country economic development.In the past, the operation of the ROSCA mainly relied on interpersonal relationships. The ROSCA’s self-discipline mechanism based on relationships-governance could not prevent and control hidden risks effectively, and also could not resolve the disputes arising from ROSCA’s failure perfectly. In the new situation of rapid economic development and people’s quick living pace, the governance mode of ROSCA should transform from relationships-governance to contracts-governance accordingly.Given this backdrop, this thesis will introduce the operation process of ROSCA via a case, and then, it will discuss the legal attribute of ROSCA and conclude the necessity of formulating ROSCA legal system. In the end, it will argue that contracts-governance is indeed an feasible way from the perspective of legislation, administrative supervision and management, and judicial guarantee.Meanwhile, it will discuss the mechanism of the risk prevention and control corresponding to ROSCA legal system from 3 aspects——before the event, in-process of the event and after the event.