Research On The Modes And The Operating Mechanism Of Informal Finance

Informal finance exists in developed countries and in developing countries, the form of informal finance is diversiform, but operational mechanism of informal finance is essentially similar. Nowadays, in china informal finance's contribution for whole macro economy is bigger and bigger, but up to the present our central government has not established the interrelated policies and regulations in order to make informal finance legal and rational. In order to make them support the whole macro economy better and make different regions choose suited modes among the different forms of informal finance, this paper use lifecycle's theory and integrate with operating mechanism which emphasize essential connotation in essential factor,connection,state and process under the direction of system approach thought, which study on the informal finance's modes and operating mechanism from driving mechanism——interest rate mechanism ,coordination mechanism——financing method,operating principle ,controlling mechanism , security mechanism——withdrawing market mechanism in order to improve further collocating-capital efficiency and function for economic development positively.The paper comprises six parts. In chapter1, firstly the author present purposes, backdrops and meanings on the selected topic. Afterwards the author explain the internal and foreign study on the informal finance. then account for the limitation on the present study , in addition the author introduce the researchful train of thought, the method, the innovation aspects and the limitation on this paper. In chapter2, The analysis of general theory on informal finance, the author detailedly define the informal finance on this paper , then explain we analyzed the existent forms and the characteristic of the present informal finance. This chart is the base of the following content. In chapter3, We discuss on the general development of informal finance in Shandong province. Firstly we have a the general situation on the development of informal finance in our country, including the same aspects on the private economy in developed provinces. Secondly we have an investigation on the development of informal finance in Shandong province, Especially, we carried on an typical investigation in informal finance on Tai'an region and had a in-depth analysis on the reason of the laggard development in Tai'an while the whole country's informal finance has a brisk development. This is the base to the next content. In chapter4, we study on the modes of informal finance. In the first place we have a classification on the present informal finance's modes. Secondly, we analyze the main body, the existence conditions, operation characteristics and merits and shortcomings on the mode in detail. Thirdly, by analyzing the selective principle and the basis of the modes of regional informal finance, in brief , according to the interlocal differences currently we conclude the ROSCA suit in underdeveloped out-of-the-way country region while the regional joint-stock investment company adapt to the developed area. In chapter5, we mainly discuss the operating mechanism of informal finance, which mainly aims at the two modes. We analyze the influencing factors of capital supply and demand and the gambling analysis of factors, then study on the operating mechanism from driving mechanism——interest rate mechanism, coordination mechanism——financing method, operating principle, controlling mechanism, security mechanism——withdrawing market mechanism to achieve the improvement of financing efficiency, reduction of financing cost, the operating mode without obstruction and so on.. Ultimately the modes are choused to realize gambling equilibrium among the funds of suppliers, funds of demand, local authority, and financial supervisor to maximize profits. In chapter6, Summary is given and continuative research on the informal finance in the future. We generalize the main conclusion in this paper and illuminate the continuative researched aspects.