Folk Lending Interest Rate Law Regulation Research

Folk lending is not the legislative term, and it describes the conduct of financial intermediation behavior between natural persons, and other non-financial institutions, or other organizations. Private lending interest is actually the capitalized cost to use a lender of funds, and this should be protected by law. With the rapid development of China’s economy, the private capital accumulate rapidly, at the same time private lending market expanded at a high speed. With the expansion of private lending market private lending interest rates correspondingly became higher and higher, even much higher than the normal private lending rates. On the one hand, private lending has a positive role in bridging the formal financial shortage, transfers of funds remaining places, solve the financing difficulties etc. But on the other hand private lending interest rates extremely high, which resulting in a series of economic and moral problems on society. Such as it affects financial security, resulting in financial order disorder, and affects social stability or leads to moral hazard etc. The outbreak of these problems in recent years in the provinces of Zhejiang, Jiangsu, Fujian, Henan, Shandong, Inner Mongolia lead to other private lending credit crisis.Borrowing rate is the starting point and the key regulations of private lending, but our law on private borrowing rate regulation exists some problems such as the concept is out of date, and the specific provisions is muddled, coupled with a great variety of avoidance exists, has made the private lending market in disarray unbearable state. It is necessary to regulate the private lending market and the private lending behavior by law. In this background to research private lending interest rate and put forward some specific recommendations to the high interest rate regulation has great practical significance.This paper is divided into five parts, the first part is mainly about the meaning, the type and the essence, the influence factors of the private lending interest rate. In another word this part is the basis of the full text. Private lending should be defined as a contract between natural persons, non-financial institutions and other organizations and so far it is out of national supervision. It has two basic characteristics these are non-formal nature and concealed. In recent stage it also showed a more diversified, general commercial, speculation of new features. From the analysis of the legal nature of IV private lending, private lending is a typical money transfer ownership contract. By subject classification, it can be divided into private lending business lending loans, individuals and non-financial corporate lending, and non-financial companies and non-bank financial institutions lending. In essence, the interest is part of the profits, interest rates are part of profitability. Private lending interest rate decision and the average profit margin, but also affected by the legal environment, the private lending market competition, bank lending rates and other factors.The second part mainly analyzes the necessity of legal regulations to private lending interest rate. From the economic point of view, the high interest rates of private lending affects the financial security, resulting in the real economy into hollow, is not conducive to economic development and industrial restructuring and upgrading. At the same time the high interest rate affects social security, stability, honesty and credibility of the basic values of social impact. However, the reason for the regulation of private lending interest rates is legal pursuit of fairness and justice.The third part of a comprehensive sort through and review the founding of New China, the direct provision regulating private lending rates and not specific provisions indirectly regulate private lending interest rates but the same can be applied to private lending interest rates, in order to come to our country at this stage of judicial interpretation and justice for the regulation of private lending interest rate path guidelines, not yet out of control thinking, too rigid, strict conclusions. And there are insufficient laws, low-level, the existence of conflicting contents and conflict, there is no distinction between high rates of private lending and usury, interest rates four times already outdated provisions, such as the inherent defects in specific provisions.The fourth part is the legislative mode study of some countries and regions. First is American-style, the government gives a certain upper limit interest rate, and the private rate which is higher than the legal is not permitted by law. The advantage is predictable and easy to operate, the disadvantage is not suitable for the diverse private lending market Second, the German mode, it does not publish certain interest rate at first, the standard does not have a defined value it considers the case, it uses the principles of public order and good morals to balance the interests between the both parties, and to justify whether they are profiteering private lending behavior or not. The advantage of this mode is better adapted to the diverse private lending market, and make it flexibility to handle cases, the shortcomings are its weakness at predictability and operational. The third is China’s Hong Kong Special Administrative Region mode as the representative of both the interest rate specified objective criteria, and integrated the actual situation of cases identified subjective compromise mode. Hong Kong’s legislative model ladder rates regulation combines the advantages of the United States and the German model, so can learn this kind of mode. We regulate private lending rates to limit the interest rate determined neither give up, but also appropriate to introduce a subjective judgment, a combination of both, to change the way across the board regulation.The fifth chapter is the conclusion of this article. To effectively regulate private lending interest rates, on the one hand it is necessary to eliminate the moral condemnation and the concept of political bias. We should abandon the idea of private lending interest rates regulated by the criminal law, adhere to the means of private law to regulate the private lending rates. We should fully understand the role of private lending beneficial in promoting economic development and encourage private lending. On the other hand the specific institutional, it is necessary to amend the existing provisions of the highest interest rates on private lending restrictions. One is to build a reasonable interest rate cap, Hong Kong, "MLO" limit rate "ladder interest" requirement can learn about. The second is the new understanding disguised interest rates, fees, etc. in disguise for raising interest rates to limit the maximum interest rate should be applied to deny "beheading interest" in effect, recognize the legitimacy of compound interest. Third, of course, is the highest interest rate restrictions do not apply to overdue interest and liquidated damages.