The Impact Of Informal Finance On Industrial Cluster

The private economy-based industry cluster such as individual and private enterprises is the reason of rapid economic development of Zhejiang. In the process of development Zhejiang industrial clusters forms to SMEs as the main body, relying on the professional market, which is known as the "Zhejiang model". Industrial clusters embedded in the region and it has obvious geographical differences. In the financing channels of small and medium enterprises, on the one hand, the formal finance deteriorates in the function of financial resources allocation, the informal finance appears as "substitutes" in financial function. Through relatives, popularity, and other relations between the networks entrepreneurs who pursuit profit deal with lending activities. This is an important channel for the private economy financing, which is a representative of the industry cluster.Further study on the microscopic mechanisms of informal finance shows that the informal finance which is anthropomorphizing is functioned with social capital as the carrier in our theoretical and empirical studies. Through informal finance systems, social capital which is a social resource provides a strong support to the development of private economy. Under the traditional culture of Zhejiang Province which relies on the blood, genetic and geographical relations and collective notion, the social relations in the industry cluster which is original strengthen the local social capital. Some kinds of informal finance such as private loans, commercial credit and RSOCAs infiltrate in the enterprises financing process within the cluster. This also plays an important role in the development of industrial clusters.With the use of the lending rates from Zhejiang's private lending monitoring network around the city, the paper does empirical research in the relationship among informal financial, industrial clusters and economic growth. The results showed that, compared with the formal finance, informal finance can be more significantly explained in Zhejiang's economic growth and the development of industrial clusters. By adding social capital variables, the paper found inherent relationship between informal finance and social capital variables.Compared with social structure-oriented social capital, community and ethics-oriented social capital promotes the development of the industrial cluster more apparent.