Research On Development Mechanism And Countermeasure Of Rural Informal Financing

Rural informal financial organizations are an effective supplement to rural formal financing of our country. Since it got approved in the year 1996, rural informal financing has fulfilled people's increasing demand for financing in the rural areas, due to its flexibility, continuously expanded scope and business scale, wide coverage in rural areas and uncomplicated loaning procedure.The article will be elaborating, from five aspects, the development mechanisms and countermeasures of rural informal financial organizations of our country.1.Forms of existence and status of rural informal financial organizations of our country. Informal financing refers to indirect financing provided by non-statutory organizations and direct financing between individuals or between individuals and enterprises, activities of which are usually not approved by the government or is not ruled under financial regulations, and which currently includes: private sector borrowing, Keidanren, private funds, rural cooperative foundation, petty loans, credit guarantee agencies of medium-sized and small enterprises and other organizational forms. Rural informal financing has such characteristics as imperfect legal norms, limited scopes of business objects, simple loaning procedure, and loose conditions for loans, etc. In the development of rural economy in our country, informal financing credit supply amount is as great as formal financing among financial system shares and is an indispensable part of the financial system of our country.2.Theoretical basis and development mechanisms of rural informal financing. The generation of rural informal financing is a result of imbalanced financial supply and demand structure. In the meanwhile, there are deficiencies in the development of formal rural financing, so requirements from rural people cannot be satisfied and informal rural financing is generated and developed to satisfy requirements of the development of rural economy. Financial inhibition theory and theory of financial deepening have shown the theoretical basis of the existence of rural informal financing. In China, main development mechanisms are institutional change mechanism and fulfillment mechanism. 3.Development of rural informal financing of various countries and reference using. Analyze rural informal financing of The United States, Germany, Japan and India, and find out inspiring effects it has to the development of rural informal financing of our country, which is the using of competition mechanism to promote various financial organizations to develop simultaneously.4.Issues that have come up over the development of rural informal financing of our country. By far, issues that have come up over the development of rural informal financing of our country are mainly operation impediment caused by imperfect laws and regulations, defections in management caused by nonstandard internal organization mode, sacrifice in the interests of farmers caused by weak exterior supervision, and issues caused by the inconsistence of lending subject and Commitment shall subject.5.Countermeasures to the development of rural informal financing of our country. In regard of existing issues with rural informal financing of our country, it is recommended that proper scales be considered, sustainable development be maintained, regulation systems be consummated in the financial operation system, standardized system platform be formed, internal management systems be generated, standardized development patterns be formed, rural credit net be produced, and cooperation between informal financing and formal financing be encouraged.