Research On The Legal Regulation Of Private Lending

Since the reform and opening up, small and medium-sized enterprises continue to grow and develop, private lending as a kind of simple procedure, low threshold, high efficiency of the financing way, effectively alleviate the financial problems of small and medium-sized enterprises. At the same time, the private lending also provided investment channels to a large number of social idle funds, adjusting the funds remaining, greatly improving the efficiency of social capital, and has formed certain complementary between formal financial institutions,effectively buffer the adverse impact of the national macroeconomic regulation and control.But at the same time, the uninterrupted civil borrowing crisis in various parts of our country also reflects the imperfect development of private lending, which has a serious impact on China's economic and social stability. Through the analysis of the development of private lending in some areas of China and the role of local governments in private lending, it can be found that the important factors for the failure of private lending regulation in these areas are the regulation between local governments and the central government differences in objectives.In the interest group theory, if there are multiple principal-agent relationship in the government regulation, there may be regulatory capture phenomenon. Although the principal often use a regulator of information superiority to punish some inefficient agent, but regulators will not completely loyal to the client, they are likely to be bought by low efficiency agents, collusion with the agent in order to seize the interests of the client. Specific to the private lending regulation process, the central government commissioned the local government to regulate private lending institutions, however, the local government will not fully implement the central government's policy, they will involve in the conspiracy in order to their own interests captured by private lenders. Therefore, based on the theory of regulatory capture theory, this paper analyzes the local government's regulation of private lending, in order to find out the deeper reason of the failure of civil lending regulation, and provide some useful suggestions to improve private lending.Firstly, this paper introduces the basic meaning of the private lending and the development status of China's private lending, so as to analyze the necessity of regulating China's private lending. Then, the paper discusses the current situation of the regulation of private lending in China from three aspects: regulation laws, regulation agencies and regulation process, In the process of analysis regulation, a multi-principal-agent model is used. Under the influence of information constraints, transaction constraints and administrative or political constraints, the phenomenon of regulation capture in China's private lending regulation is revealed, andexpounds the three main ways of China's private lending regulatory capture in reality. Then,from the perspective of game theory, this paper constructs a dynamic game model between local government and non-governmental lending institutions, and analyzes the causes of the regulation of private lending. Then, with the help of organizational conspiracy theories, the mechanism of collusion in the process of private lending is designed. Finally, on the basis of mechanism design, some countermeasure suggestions are put forward to avoid collusion regulation.