Research On Development Of Informal Finance In China From The Social Capital Perspective

Since the reform and open policy, the formal financial system in our country has got great development, and the formal financial market composed by money market, stock market, bond market is gradually becoming mature. At the same time, the informal finance has become more active, and plays an extremely important role to the small and medium-sized enterprise financing in our country. History of reform and opening up economic development shows that there is no private finance, it is impossible to have developed China’s private economy now. The development of china’s private enterprise is mainly due to the informal financial credit support. Informal finance and formal finance to complement each other, to meet the needs of private microfinance, realize its long-term stable development. But for a long time, the Chinese government has always been taking suppress and restrict attitude to informal finance’s existence and development. Practice has proved that, this approach is not successful, and even to some extent, had the opposite effect. The existence and development of informal finance, is not only an economic phenomenon, but also a cultural phenomenon, which has its objective necessity, if we confined to the theoretical framework of economics or sociology, it will be difficult to make a comprehensive and systematic explanation. Judging from the existing literature, the domestic and foreign scholars have begun to focus on the role of social capital in the private financial development, but the research is still has a general lack of depth. Propose and use of social capital theory, is consistent with the development trend of interdisciplinary, on the other hand also in line with the social history of our cultural and institutional background. Therefore, based on the analysis of economics and sociology, this paper from the social capital perspective, analyze the development of informal financial operation mechanism, so expect to promote the healthy development of China’s informal finance, to ease the bottleneck problem of financing small and micro enterprises to provide some theoretical and policy basis.The main purpose of this study is that:on the one hand, by revealing the law of the development process of informal finance students’ financial needs and supply, combined with the development of non-formal financial operation mechanism and efficiency of the process, to re-recognize the economic development of the informal financial positive role for the development of financial constraints hinder, make relevant suggestions to promote non-formal financial full play to its functions and moderate contender to become a useful supplement to the formal financial system, to better serve the private economy and rural the needs of local reform and development; on the other hand, can be from a new angle to look at the problems and shortcomings of the formal financial system, and reveal defects regular supply of financial services, which draw on informal finance development experience and ideas, reform and improve the existing financial system, promote financial market development, and promote financial innovation, to enhance the level and efficiency of the supply of financial services.The main conclusions include the following:First, the existence of informal finance and development with the objective necessity, if the government blindly informal financial negative attitude adopted policies to limit and suppress, ignore its positive in some areas action would be contrary to the objective laws of economic development; Second, social capital on informal financial development has an important role, through the trust mechanism, reputation mechanism and regulatory mechanisms work together and promote the development of non-formal financial activities; second, non-the size of the formal financial existence interpersonal boundaries and geographic boundaries, as opposed to formal finance, informal finance has a comparative advantage in a narrow range, to solve the problem of information asymmetry rely mainly on relationship lending; Fourth, to promote the development of non-formal financial need to play good government in guide and regulate the development of informal finance the important role of comparative advantage to make good use of informal finance, amplify the positive effects and weaken the negative impact of non-formal financial transactions to reduce the uncertainty and inhibit financial risks that may occur with the community hazards.The main innovation of this paper is reflected in:First, to research the informal financial development from the perspective of sociological has theoretical value of innovation. At present, there are few domestic academic concern the informal financial development research from the perspective of social capital, only a few articles’s content relatively fragmented, which lacked of normative empirical research and did not form a unified theoretical framework, there is a big controversy even in the most basic concepts and conclusions. This paper attempts to make up for the limitations of previous studies, based on domestic and foreign scholars’ study on the informal finance, from a new angle of the internal informal finance view, to build the research framework of endogenous social capital and informal financial development, and provides a new ideas and research perspective for informal financial development, it is a innovation,development and improvement of the social capital theory and informal financial theroy. Second, this paper defines the social capital mechanism in the informal financial development for the first time, and has carried on systematic research. Social capital as a non-institutional factors, its influence on the informal finacial development has been confirmed by theoretical and empirical research in academia, but there are still many deficiencies. The research defines the social capital mechanism in the informal financial development for the first time, and systematically studied the way and the mechanism of the social capital how to influence the informal financial activity efficiency, and studies its important role in the informal financial development. Third, based on game theory, this research constructs the research model of social capital and the informal financial development. In this paper, by using relevant theories of game theory, we established the social capital and the informal financial development model, and make a system analysis of both lenders and borrowers’game strategy selection under the the social capital constraint mechanism. Forth, empirical analysis of the relationship between social capital, non-formal financial development and economic growth. Use of our31provinces (municipalities and autonomous regions)2004-2011panel data on the relationship between social capital, non-formal financial development and economic growth empirical research. Conclusions showed that:social capital and non-formal financial development on economic growth in China has a significant role in promoting the interaction effect of social capital and financial development plays a role in promoting economic growth, but also shows that social capital is to promote the development of non-formal financial important factor. Subsequently, the proposed cultivation of social capital and the promotion of non-formal financial development countermeasures.