Informal Finance Study In Yongkang

This paper aims at practical analysis and influential analysis of informal finance based on the survey of 180 rural citizens who engaged in informal finance in Yongkang area. The paper is divided into three parts, including the conception and theory of informal finance,practical and influential analysis of informal finance and conclusions and suggestions.The first part is to introduce informal finance. At the very beginning, this paper defines the conception and deep meaning of informal finance; secondly, it divides informal finance into eight categories, including micro credit, rural credit cooperatives, pawn shop, rural cooperative foundation, non-governmental fund, financial cooperation, informal finance and private banks. Finally, the paper introduces informal finance theories, for instance, financial repression, financial deepening, soft budget constraints and financial system arrangement.The second part is to analyze the practical and influential factors of informal finance in Yongkang area. Firstly, the paper gives a statistics analysis of the questionnaire, for example, the respondents'ages and education backgrounds, loan amount and interest rate, borrowing method and behavior, loan method and behavior. Then the paper summarizes three conclusions, including borrowing and loaning method is not perfect, money demand is greater than the supply of funds and borrowing risk is fairly high. Secondly, this paper analyzes influential factors of informal finance. Finally, it summarizes several conclusions, including low income households and high level income households tend to borrow funds; borrowing needs are mostly located in high and low level assets households and loan amount is positively related to interest rate, income level and assets level.The third part is to give conclusions and suggestions of informal finance. The advices are as follows: draw on the advantages of rural cooperative foundations and improve them to re-build rural policy financial institutions; the government should increase investment in rural finance and encourage the process of rural finance and preferential policies should be taken as well; to improve the level of the financial system, lending constraints, to protect the privacy head, bound the behavior of borrowers, lending norms to protect the orderly; to build a personal credit system to improve the borrowing constraint,, to improve the efficiency of private lending; to recommend the development of local governments to encourage private lending to the effect of high interest rate risk, while reducing the risk of private lending.