The Review And Reconstruction Of Chinese Usury Laws

Controversy over interest and usury in economic life has never stopped. Although the definition of usury given by different legislators at all times is various, they all without exception carry out regulations on it. The dissertation starts with define the private lending interest rate control from home and abroad in agricultural community and give a analysis of its evolution. Then acting in the context of modern industrial society, the rules on informal financial market is a balancing result between regulation and competition. On the basis of the domestic legislation, I tried to analyze the practical effect of usury laws and proposed suggestions to put forward the reconstruction of the financial market.The dissertation consists of seven parts. The first part involved analysis on key terms in the usury laws by clarifying the relationship between the concepts. After studying Chinese and foreign literature, I summarized the changing meaning of usury in ancient and modern times in both domestic and foreign nations. Followed introduction of the current interest rate controls on the status of private lending, I pointed out the current interest rate controls affect the development of private financial markets.The interest rate policy must be carefully adjusted to guide the private capital into the industry development, so that private financial lending and formal financial institutions can coordinated together to promote economic development.The second chapter systematically presents the usury laws of the agricultural society home and abroad, from Mesopotamian times to 18th century. The different stages show different legislative, regulatory characteristics. Also throughout the agricultural society and foreign control evolutionary history of usury, based on different moral and economic factors, the attitudes towards means of regulation are still various. The Chinese usury has never been stopped by any religious and ethical obstacles. Therefore, the usury laws are not only the behavior of governments and rulers to regulate the economy, it is the result of a series mutual restraint and social customs which also have a great influence of forming regulations.ChapterⅢfocused on Roman Catholicism and Islam, I give an analysis of usury laws in agricultural society are based on moral and ethical values. Both Roman Catholicism and Islam criticize interest practices, for they want their people to live peacefully. With the continuous social and economic development, agricultural society stepped into industrial society. Adam Smith and Jeremy Bentham had a famous usury discussion, which is represented by the emerging bourgeoisie Bentham appealed for losing the interest rate control, so that the benefits can be transferred from land owners to the capitalists. The whole debate shows the core of moral regulation on usury laws in agricultural faced the challenges of the new generation and definitely give its way to efficiency related usury laws.The fourth chapter focuses on countries’ usury laws in modern industrial society. By introduction of United States, Germany, Belgium, France and other countries on the control of private lending rates, I summarized three different control ideas nowadays. One is based on the administrative rules on behalf of the United States control means, which is similar to our country’s rules. The other is represented by the German ruling idea of the civil justice adjustment. In such cases the judge can refer to a variety of factors make comprehensive judgments. The third idea is somewhere in between, that is, a certain interest rate cap required by the Government, but the upper limit in a flexible state, or after the fact by the judge discretion to limit to some extent on the amendment. This regulation means to France, Belgium, the Netherlands and other Western European countries represented.Next chapter analyzed whether the modern economy liberalized interest rates cap. Nowadays the debate on interest rates is no longer limited to the moral level, but rather to reflect fully the benefits of control. Support the opinion stated that the interest rate control can be used as tools of government social distribution of wealth to protect the vulnerable borrowers from a strong market position with the predatory lenders. But the opposite opinion is that the market is much, better than interest control to redistribution the wealth. The control distorted market pricing, so that the parties can not make reasonable adjustments according to their own situations.PartⅥpresents judicial determination of the Chinese usury law [1991] part 21.The courts on the one hand recognized private lending is a civil act, on the other hand the regulation of informal finance has been considered to be one of the responsibilities of the jurisdiction. The judgments on the private lending tend to be a strict control. But in fact, as the result of Chinese financial circumstances, the strictness has negative effect on the financial market.In the last part, the dissertation presented, to promote the development of private finance, we should reconstruct the approach for our usury laws. First, a subjective way to view usury must been introduced. Second, the People’s Bank of China can be the governmental subject for the regulation of interest rates. Also in the specific interest rate controls, the proposed classification is suggested. Finally, flexible mechanism is considered a better way to achieve the formation of interest rate controls.In summary, this dissertation seeks to break the topics on the usury, with a large number of foreign extensive collections of reading and a broader perspective to analyze interest rate control. And Of course, the studies on interest rate and usury in China should not just stop there. Compared with the large collection of foreign literature on usury researches, the domestic studies in this area are relatively immature, or only have some articles presented from the historical aspects of Chinese usury. I hope I could do some help to further usury research.