The Research On Legal Prevention For Chinese Folk Loan Risk

It is incontestable that Informal finance played a remarkable role in the economic development in China by solving problems like financing difficulty in small and medium-sized enterprises, rural areas and individual households. Currently, China hasn’t admitted the legality of informal finance yet, and thus leads to a lot of controversy toward the legality problem. As a spontaneous market activity, the subject of informal finance contains the credit risk itself. Unreasonable business model of the informal finance institute may leads to operational risks. And the supervisory problems in china make the risk of informal finance completely unmasked. How to regulate informal finance in legal dimension to make it positive is of problem of great importance. There are 5 parts in this thesis.The first part mainly describes the types and causes of informal finance, including conceptual features and the forms of existence. Make a definition of informal finance through a compare of definitions made by scholars all over the world. The author chooses The pearl river delta region as a typical example to analysis, referred to 150 judgment made by court in this area randomly, and the result reflects the feature of informal finance in our country. Moreover, this part expound the detail of the form of existence of informal finance in our country, which include direct lending, rotating savings and credit association, pawn shops, underground private banks and private equity and so on. This part especially analyzed what kind of risk we are facing currently in our country, mainly contains the legality risk coursed by the unclear legal position of informal finance subject, risk of breach of contract coursed by feature of the subject, operational risk coursed by irregular operation, and system risk coursed by local feature and capital source, and analyzed why these risk exist.The second part is mainly about the current legal regulations concerning informal finance in our country and analyzed the imperfection of the legal system on this matter. The author concluded that the risk of informal finance resulted from imperfection of the supervisory system for informal finance subject, unreasonable market entry certification system, and imperfection of regulation system for certificated subjects via analysis on current legal regulations.The third part mainly introduced abroad experience on informal finance and some criticisms about it. In this part, the author compared the informal finance in Japan, America, and Hong Kong China in their administration, legislation, market entry certification system, control of interest rate. And get enlightenment through these comparing.The fourth part is mainly about the suggestions and establishment of legal regulation system on informal finance in our country. This is an important part of this thesis, including suggestions on establish the legality of informal finance through legislation; build a multilevel supervisory system which will harmonize the work of different administrations and build self-regulation system. And the last part is to regulate the risk of certificated subject by offering a format text of informal finance contracts, emphasizing the ability of repaying a debt, and building an exam and registration system.