Research On The Legal System Of The Risk Prevention Of ROSCA

Rotating Savings and Credit Association(hereinafter refer to ROSCA) is a form of private finance, popular in southeast China region, having quite a long history in China. ROSCA has played an important role in the living, producing and regional economical development for a long time. Today, formal financial system is relatively well-developed, and private finance is diverse, even so, as a traditional private finance, ROSCA still has a considerable amount of the total financing, occupying an important position in the financial system.The operation of the traditional ROSCA is relied on the customary rules formed by practice, guaranteed by a relatively closed region and the social resources handed by members in the region, in this way, the trust relation between the members of ROSCA would be maintained, and the constraint mechanism to make the members perform obligations would be formed, thereby ensuring the smooth running of ROSCA. But with the development of society and the gradual disintegration of traditional social relations, traditional constraint mechanism that works to maintain the ROSCA faces challenges, the risk of ROSCA becomes complex and runs beyond the control of the traditional restraint mechanism gradually. The most prominent manifestation is that since the late 80 s of last century, there are more and more reverse and crash events in Zhejiang, Fujian and other areas, causing great economic losses. A series of community events spawned by the reverse storm endanger regional stability and social order. In this process, there are no laws and regulations which play an active role. Because of the lack of a clear legal basis, the government did not take effective and timely measures, but only clean up the involve matters afterword. However, ROSCA did not decline, due to the driving of the large demand of the private finance, ROSCA flourished after a brief pause. Until today, ROSCA still be marked as an important way of private finance, presenting in our town and village society and even in the city.In a new social context, the risk of ROSCA becomes complex, which mainly performances in following aspects: the relation of members and networking. In this context, since the ROSCA has become an important part of social and economic life, taking measures to prohibit ROSCA is clearly not realistic. Therefore, in order to make ROSCA play its positive role effectively while preventing various types of risks in its operation, the legal system of the risk prevention of ROSCA should be established. By bringing ROSCA into the orbit of law and making proper monitoring and guidance, the prevention and the control of the risks of ROSCA will be achieved, which will promote the healthy development of ROSCA.This research selects ROSCA as an object and T town Fujian Province as a sample, applying literature analysis, empirical analysis and sociological research methods, using particular cases as foundation, collecting and analyzing relevant contract and receipts,, interviewing remembers and combining with relevant papers, researching the operating mechanism and the risks of the failure of ROSCA in T town, trying to analyze the risks of ROSCA and make recommendations to the construction of the legal system of the risk prevention of ROSCA.This paper is divided into four parts:In the first part of this article, the author conducts a systematic investigation and research to the selected case--T town in Fujian Province, by analyzing and summarizing related ROSCA contracts, receipts and other research data in hand, we can come to the historical change, operating modes, the functions and the problems of ROSCA.In the second part of this article, the author provides a summary of the basic situation of ROSCA, tracing the first names and definitions, summarizing the main features, studying the history of changes, analyzing the constituent elements of ROSCA, forming an accurate define of ROSCA, and then the foundation for the following research is laid.In the third part of this article, the focus is fallen in the analysis of the legal nature of ROSCA. The author explains the nature and the legality of ROSCA, analyzing relevant theory of the ROSCA contract, demonstrating the legality of ROSCA. In this way, the theoretical clue of following research is clarified.In the fourth part of this article, the author bases on the ROSCA of T town in Fujian Province, summarizing the causes of traditional ROSCA under customary rules, as well as the traditional means of control to the risks of ROSCA,analyzing the new changes of ROSCA(include its specific representation and causes), economical and cultural context according to the development of ROSCA of T town.In the fifth part of the article, the author puts up some ideas which is suitable for the actual development of ROSCA and the principle of the construction of the legal system of risk prevention of ROSCA.