Judicial Protection Of Informal Lending Interest Rate-empirical Study Of Disputes On Informal

Informal lending interest rate is the core element of informal lending and thelegal issue that has raised considerable concern in recent years. The rule of four timesthe interest rate stipulated by Supreme People’s Court in1991has been enforced todate, but has not played a role in the regulation of high-interest informal lending. Onthe contrary, the rule has inhibited the development of informal finance. Nowadays,there exist few empirical studies on the rule of informal lending interest-rate ceilingfrom the perspective of judiciary. Therefore, this thesis explores judicial logic of thetrial of disputes on informal lending interest rate. At the macro level of judiciary, inorder to further clarify the handling of problems with respect to interest rate, differentHigher People’s Courts have promulgated relevant guiding opinions. However, theseopinions did not make substantive supplement to the rule of four times the interestrate. At the micro level of judiciary, it is worth learning whether there is anydifference of the interpretation of the rule among trial judges and what caused thedifference.This thesis has collected1421cases regarding informal lending interest-ratedisputes in Zhejiang province as the sample group and made the statistical analysis ofthese data. Variables in this study include the district a certain court belongs to, the particular year when a case is concluded, the trial procedures, the nature of lendersand borrowers, the period of lending, the amount of money, the condition of guarantee,initial verdict and the category of verdict which is classified according to judges’ wayof the application of the rule, etc. Through the summary and analysis of the samplegroup, there is a finding that even though the rule seems to be clear, judges’ verdictsvary greatly. The difference of verdicts involves the interpretation of the rule, theaccount form of the interest rate, judges’ tendentious protection of the interest rate andthe handling of the high interest which has already been paid. After the correlation andregression analysis between different variables of the cases and corresponding type ofverdicts, this thesis finds out that many elements have influenced the judges to maketheir judgments and the relevance is very significant. On the basis of the result of theempirical study, this thesis offers a proposal about reforming the rule of interest-rateceiling after learning relevant regulations overseas.It could be concluded from the result of empirical study that judges have playedan important role in supplementing the ambiguities and gaps of current rules withoutbeing influence by China’s political institutions and legal system. Undoubtedly,judges have supported the normalization of informal finance significantly.There are five chapters as follows:Chapter I systematically summarizes the current legal documents regarding therules of informal lending interest rate that are valid nationwide and the rules withrespect to the the handling of interest rate that are promulgated in relevant judicialguiding opinions of Zhejiang, Shanghai, Jiangsu and Chongqing provinces, and thenproposes the existing problems with regard to the rule of interest-rate ceiling based onthe status quo of China’s informal finance development.Chapter II analyzes the basics of the gathered1421cases with the empiricalstudy method, categorizes Judges’ verdicts into four types that are greater than fourtimes, equal to four times, considered to be equal to four times and less than fourtimes, after conducts the correlation and regression analysis between differentvariables of the cases and corresponding type of verdicts, concludes the logic ofjudges’ verdicts. Chapter III summarizes the extraterritorial regulations and judicial practice,explores improving solutions of the rule of informal lending interest rate based onjudicial empirical study, then offers a proposal of the legal framework of informallending interest rate.Chapter IV compares national system of the United States to that of China,analyzes the role of judiciary in China and China’s active judiciary, then discusses thecontribution made by judges about the supplement to the gaps of current regulationsand normalization of informal finance.Chapter V makes conclusions.