The Law and Regulation of Informal Finance in China
|Keywords||folk financing risk institutional regulation|
Since the reform and opening, with the rapid economic development and the increase of social wealth in our country, folk financing is becoming more and more active. As an efficient allocation of funds and resources, folk financing has performed a positive role in the area of remedying the lack of bank funds, allocating resources rationally, meeting the financing needs to the market participants such as middle and small-sized enterprises, agriculture, rural areas and farmers, accelerated the prosperity of economy. However, along with the crises are emerging gradually as the results of capital chain rupture in some areas in our country, people’s concerns about "Folk financing is a double-edged sword" is becoming reality day by day. In recent years, folk financing crisis broke out because of the capital chain rupture in some hot spots such as Wenzhou, Erdos and so on. Many entrepreneurs and business merchants living for folk financing were heavily in debt and chose escape, a lot of enterprises could not repay the debt and went to liquidation, a large number of people who put their many years savings into the folk financing market to seek handsome profits, became down the drain. The huge risk of folk financing is shocking, its wide influence attracts national attention, and its profound and lasting harm endangers the safety of financial system in our country, gives negative impact to the healthy development of the economy and the harmonious operation of the society, even covers a shadow to the recovery of the world economy in the background of the global economy retreating.Seeking profits is the nature of the risk consists with folk financing from its birth, risk exists in the folk financing no matter in which country and which parts of the world. The risk of the folk financing reflects especially obvious in our country, the reasons are various, for example, the industrial structure is unreasonable, the economic development mode is backward, fictitious economy expands overly, the macro-economic situation is not good. However, financial system is faulty, institutional norm is not sound, supervision measure is not in place are the main reason.In order to prevent and resolve the risk of the folk financing, the first priority is strengthening the guidance and specifications. Although we have some laws and regulations on the folk financing, yet these laws and regulations are not systemic at all, only can be found in Contract Law, Guarantee Law, Criminal Law, the General Principles of the Civil Law, some Administrative Laws and Regulations issued by the State Council, and some Judicial Interpretations issued by the Supreme People’s Court. There is no specialized regulatory body to regulate the behavior of the folk financing, and no anticipation and coping mechanisms to deal with the risk of folk financing, after risks take place, no emergency response mechanism can be used, folk financing is almost in a state of neglect. Because of the absence of system and the imperfection of law, the risk of the folk financing is lack of strong regulation and control, once the crisis takes place, the consequence of the folk financing will like uncontrollable bolter.Based on the above issues, studying the subject of "the Institutional Regulation to the Risk of the Folk Financing in our country " is particularly necessary and urgent. Meanwhile, this subject is of great importance to promote the reform of the finance system and make it perfect, accelerate the positive operation of the financial market and maintain financial security, and ensure the health of economic development.