Study of Development of Private Finance in Xiangxi
|Keywords||Private Finance Formal Finance Economic Growth|
Private finance has a long history, and along with the further development of theeconomy, the increasing scale of the development trend is unstoppable. Private financeas an important complement to formal finance, plays an irreplaceable important role inthe development of formal financial as well as economic growth. But private financehas been separated from the formal financial system and has neither related laws andregulations to recognize their legal status nor the system of constraints and regulatory,its’ non-standard development will lead to a variety of negative influence. Xiangxi Folkfinance has rapid development, expanding, flexible lending, and diverse ways, but at thesame time the existence of the structure is irrational and it has non-standard problems.The Xiangxi ’s illegal fund raising case and Wenzhou’s lending crisis show that if it outof civil financial understanding and supervision, private finance will cause hugeeconomic harm. Studying how to play the positive effects of private financialdevelopment, and how to avoid its negative influence has been the focus of attention ofacademia and industry, but also has a very important theoretical and practicalsignificance.On the basis of sorting out the relevant research literature and analysis of the sizeof the civil and financial development in Western Hunan Province, characteristics andtrends, we study the related mechanism of private financial impact on economy and usedata to an empirical test and case proposed to give full scope to the positive effects ofprivate financial and suppress the negative influence and to promote the healthydevelopment of private financial policy recommendations.The results show that, the Xiangxi private financial scale continues to expand overtime, and has been active in various aspects of economic life and plays an importantcomplementary role to formal financial impact on economic growth which should notbe ignored; By measuring Xiangxi’s eachregional non-governmental financial scale wefind that Shaoyang private financial is the largest, followed by Huaihua, but a minimumlevel of Zhangjiajie and Xiangxi Autonomous Prefecture; The ways of private financeto promote formal financial development is capital outflow effect and effect of thepresence of capital inflows, while the private financial development to promoteeconomic growth is achieved by promoting savings, increase revenue, promoteinvestment, increase efficiency, improve the environment and the promotion ofnon-governmental economic development in six areas; Private finance does not regulatethe development of the negative influence and private financial development is notconducive to national macro-control,contains a great deal of financial risk and is notconducive to financial unified supervision.Xiangxi Folk’s overall and regional empirical results on positive effect of financial development show that the Xiangxi Folk financial development is its formal financialdevelopment Granger cause, but in West Hunan formal financial development is not acivil Granger cause financial development.Private finance can promote economicgrowth by way of formal financial and private finance and the informal financial mutualpromotion and enhancement show the higher effect than purely private financialcontribution to economic growth, and if we can achieve the positive interaction of thePrivate Finance and the formal financial, then the contribution of economic growthshould be the greatest.Standardizing and guiding the healthy development of the private financial needsboth from a macro-government level, but also the need to micro-enterprise level ofinternal control and regulate. On government level on the one hand we need to create agood development of private financial institutional environment, on the other hand werequire the government to implement effective supervision in order to maximize thepositive effects of private financial development；On enterprise level, we need both tostrengthen the private sector financial institutions of own internal control to preventprivate financial risks, but also self-improvement of the supply side of funds in order toavoid the negative influence of the civil and financial development.