Changes In China's Rural Non-formal Financial System

In recent years, the rural informal finance which is based on the personal connection, the geography and the blood relationship has become the important support strength in China's rural financial market, but at the same time the risk in the informal financial development such as rotating savings and credit association downfall etc which are harm to the society should not be overlooked. In fact, the rural informal finance in China is not only a short-term phenomenon, and its existence and development are also not only single economic factor, but a very complex social background.Based on this, this article attempts to take the division of labor as a theory foundation, the transaction efficiency as the main line, and constructs a theoretical framework about the division of labor evolution—transaction efficiency—informal financial changes, explaining the internal logic of informal finance changes in this framework. This article holds that the size of transaction costs which are brought by the terms of trade changing are the important clue to the understanding of the rural informal financial change. The informal financial change in fact is the process of the transaction cost reducing unceasingly brought by the rural finance division of labor evolution. Therefore, in China rural finance market, a kind of rural finance institutional arrangement is effective or not is due to that it can bring the transaction cost saving, not the government approving.Meanwhile, the formation of China rural finance market effective institution will be a long-term process, and any policy of "impatient for success" is difficult to play really effects. So we should fully pay great attention to the intrinsic logic of rural finance evolution in the rural finance development, and give rural finance traders more options, allowing them to continuous trial and error in the market transaction, then guarantee the existence of a competitive rural financial market. In the long term, the "trickle-down effect" through the numerous traders and their behaviors will be conducive to the formation of the pattern of a competitive rural finance institutional arrangement.