Study On The Government Supervision Of Informal Finance

Informal financing boosts the efficient allocation of capital and resources according to the market leverage, and it plays a very important role in alleviating the economic development demand for funds. Meanwhile informal financing promotes the rapid development of the local non-public sector of the economy and makes up for the deficiency of formal finance in economic development. However, as a product of the market economy, informal financing has its own inevitable disadvantages: spontaneity, profit and disorder, what is more important is that because of long-term free in the national financial supervised system, its risk is difficult to be supervised and controlled effectually. Once the capital operation of a part in problem or used illegally by someone, it will often cause a series of chain reaction, which will hinder economic development and influence the local social stability and people's life. In recent years, informal financing crisis has been emerged in many districts. This reflects that there is deficiencies and inadequate in the local government supervision of the informal financing. Formalizing the development of informal financing and avoiding the financing risk through government regulation is an important topic of worth studying.This paper studies the current situation and the deficiencies of government supervision of Handan city informal financing by the study of literature, field investigation and comparative research and search out a new manage model giving priority to local government supervision and mobilizing all departments to participate in regulation. According to investigation, this paper has found that Handan city informal financing government regulation exists the following questions:(1) Regulatory basis is imperfect, legal publicity is inadequate.(2)Regulatory body is not clear, interdepartmental information is asymmetry.(3) The definition of supervision content is not clear, understanding of development is slow.(4) The lag of supervision is unable to achieve the desired result. The cause of the above problems lies in the following:(1) Imperfection of regulatory system and laws, lack of regulatory experience.(2) Decentralized regulation, lack of harmonious and unified regulation.(3) There is a deviation in regulation positioning and there is no risk monitoring and early warning mechanism. In order to solve the regulatory problem of informal financing, we need to do as follows. First of all, the legal status of informal financing must be established of laws and regulations. Local government need to create a special regulatory model starting from propaganda to clarify the regulatory body, establish the regulatory net, refine the regulatory content, achieve entire regulation and improve regulatory effect. In addition, we have to promote economic and financial reforms actively, advance the interest rate marketability reform, expand the channels of informal financing and boost the development of individual entrusted loans.