Research On The Evolution Of China's Rural Informal Finance

China is an agricultural country. There are 62%of 13 billion population in rural area and 30 million population are poor. After formal commercial bank withdrew away from countryside, rural credit cooperatives became the only formal financial institution that has the closed relationship with farmers and finances the development of rural economy. However institution changes of exogenous rural credit cooperatives didn't take an effective rural finance development path. The intrinsic funds demander can not be satisfied. The more formal rural financial institution is, the more favorable for the local government to control. The famer still can not get the required finance service.China rural informal finance has over 1500 years history. It is a response to the heterogeneous demand of the households, has small amount, scatters and seasonal characteristics to provide finance to farmers. It grows faster with the China's rural economy reform. With the development of rural informal finance there are many alienation cases owing to the finance policy, law and regulations, e.g. the crash of ROSCA, pooling funds illegally, usury etc. How to guide adroitly it's actions according to circumstances, foster it's strengths and circumvent weaknesses to develop further rationally, which is worthy of exploring an evolution path suitable for the conditions of China.China's rural informal finance experienced natural evolution before the establishment of PRC to the stage intervened by the government policy. That the government had been taken suppressing and elimination policy can not make it disappeared, to the contrary it develops faster and stronger. Rural informal finance compensates the shortage of formal finance in rural finance market. It supplies the funds to township enterprises and poor households who can not financed by formal banks. The result of empirical analyze show that informal finance is more effective compared with formal finance and plays a key role in rural economic growth. With the development of economy, to treat the rural informal finance critically and improve it's Pareto efficiency, which is necessary to research the deeper evolution reasons of rural informal finance from the history aspect. It has practical significance to research the history experience and specified laws, to be guided by the rural evolution path of other countries and explore China rural informal finance evolution pattern and path.The paper based on the basic definitions, collection and collation of literature. First, to explain the characteristics of China's rural informal finance evolution and dig it's heterogeneous and special reasons. Secondly, to analyze empirically the effects of China rural informal finance. Lastly, to make conclusions for the evolution of other countries and put forward the evolution path suited for us. The paper includes seven parts:Part I is the review of the literatures.Part II is the basic theory of China rural informal finance. Take the rural informal finance as a part of finance resource to research the evolution pattern and path of China's rural informal finance from the synthetic point.Part III China's rural informal finance experienced from natural development to the stage intervened by the government policy with the development of pretty commodity economy and market economy. The history proved that both extremely strategies-being dependent completely on the "invisible hand" and "visible hand" can not reach Pareto Optimum of rural informal finance resource. It is very necessary to explore an evolution path of rural informal finance suitable for China characteristics to improve Pareto efficiency.Partâ…£explores the inner reasons of rural informal finance evolution from market mechanism and the special reasons under the condition of transition economy point, make field research in Liaoning Province.Part V analyzes China's rural informal finance effect from theoretical and empirical aspects. Rural informal finance is not only the allocation pattern of rural finance resource but also play a key role to support rural economy growth. But this effect is reached under certain restrained conditions.Part VI and Part VII guided by the experience of foreign country rural informal finance evolution, China's evolution pattern and paths, compatible institution arrangement are put forward.PartVIII the policy suggestions are given based on the conclusion of the paper.There are many publications in the history of development of China's rural informal finance. However it is the creation to research the evolution pattern and paths rooted on the historical evolution point of China. The idea that the different evolution patterns and orders of China's rural informal finance-the induced institutional changes from down to up combined the compulsive institutional changes from up to down and three paths is creative and cutting-edge.