A Positive Analysis Of Informal Finance, Formal Finance And Economic Development Of Sichuan Province

Informal finance is. always a hot discussion in the world. It is produced in the private economy spontaneous. It has made tremendous contribution to non-state economic development. The statistics of2013show that non-state economy’s contribution to GDP is over60%, contribution to tax is over50%and the contribution to employment is over80%. While in all bank credit assets, the ratio of non-state economy is less than30%. The huge gap between them is made up by informal finance.As in recent years, inflation and monetary contractions made it difficult to SMEs and farmers obtaining funds from the formal finance. Then informal finance became increasingly active in Sichuan Province. As an important supplement to formal finance, informal finance has flexibility and convenience features. It has deep into all aspects of economic activity and has become an important support to private enterprises and non-state economy in Sichuan. In order to be able to make Sichuan Province’s informal finance develop in positive direction, guiding and regulating their healthy operation is necessary. But the papers about Sichuan’s informal finance are few. And most of them focused on the theoretical level. This paper combines theoretical analysis and positive analysis to analyze the relationship between informal finance, formal finance and economic development of Sichuan Province.Firstly, this paper reviews the domestic and international finance research about the relationship among informal finance, formal finance and economic development in history. It includes five aspects. First define the meaning of informal finance. Second summarize the cause of informal finance from institutional and information economics perspective. Then divide the relationship between informal finance and formal finance into horizontal and vertical sides. After that, it summarizes the policy formulation. Finally, it summarizes the research results and financial status of folk theory of Sichuan Province. After combing the literature, this paper analyzes the development of informal finance in Sichuan Province. Including the development process of informal finance in Sichuan Province and characteristics exist in the form of informal finance and the social demand&supply for informal finance.Secondly, we use θ value method to estimate the scale of informal finance in Sichuan Province. To make the original formula more scientific, we put GI (government procurement) this new control variables into the formula. And elect provincial statistics year actual foreign direct investment as FDI (foreign direct investment). We chose the most developed financial, regulatory city, Beijing, as the target city. Assuming the scale of informal finance in Beijing is small enough to ignore. Then calculate θ values. After that, we use Sichuan’s financial data to estimate the scale of informal finance in Sichuan Province from1997to2012. On this basis, we analyze the relationship between informal finance and formal finance, informal finance and economic development in theoretical level. Then we use positive analysis method to verify. The results showed that:(1) In Sichuan Province, the presence of the informal finance and the formal finance boost two-way;(2) Although, informal finance has two side to economic development, positive and negative effect, the positive effect is greater in Sichuan Province.Finally, we compare the informal finance development method among the United States, Japan, China Taiwan and Wenzhou, Zhejiang. On this basis, according Sichuan Province’s situation, we give suggestions from the regulatory authorities’ view and informal financial organizations hierarchy. And strive to standard the informal finance in Sichuan Province. At the same time, provide some reference to make informal finance of Sichuan Province develop healthily.