A Research On The Relationshiip Between Rural Formal Finance And Informal Finance Of China

Economy can't develop without finance.Finance not only provides adequate funding for economic development but also plays a regulatory role in the economy.However,finance depends in part on economy.There is a dual structure in economy and finance of China.Especially in rural areas,the system consists of formal finance and informal finance.At present,rural formal finance mainly includes policy finance,cooperative finance and commercial finance.The informal finance refers to financing activities that are divorced from government financial supervision,which mainly includes private lending,mutual aid,and underground banks.Due to the urbanization tendency and the motive for maximizing profits,formal finance is unable to provide sufficient financial service to meet the needs of rural capital.Informal finance can't meet rural financial needs either because of its unclear legal status and incomplete financial mechanism.It attempts to study the specific relationship between the two and integrate resources of the two so that the overall needs of the rural financial market are met.Therefore,it is clear that the research on the relationship between rural formal finance and informal finance conducive to studying the regulation of the rural financial market.There are two-way relationship,one-way relationship,and independent relationship between rural formal finance and informal finance in existing researches.These relationships are established within a certain range,but they are not accurate enough out of the range.There exists coupling effect between rural formal finance and informal finance of China.After clearly positioning the relationship between the two,this article puts forward the importance of optimizing the relationship between the two and carries out operability analysis.Concretely speaking,the importance includes eliminating financial repression effectively,accelerating urban-rural integration development,and improving the welfare of farmers.Operability includes the theoretical basis,practical needs,and successful experience.The empirical analysis of the relationship between Chinese rural formal finance and informal finance by constituting VAR model and impulse response function proves that the two have a coupling relationship again,manifested by the former's role promoting the latter.Therefore,relationship between the two can be effectively integrated to stimulate the efficient development of the financial market and economic subject.There are suggestions to optimize the relationship between the two from the overall strategy and the specific development of rural formal finance and informal finance in rural areas.It can improve the rural financial market.The quality of the ruraleconomy is guaranteed and benefits are steadily improved.The overall strategy for optimizing the relationship between rural formal finance and rural informal finance includes the vertical integration strategy and horizontal integration strategy.The specific development of the two includes institutional environment,legal supervision,and credit evaluation.