On Legal Regulations Of Private Lending

In recent years, the rapid development momentum of Chinese private lendingactivities made a significant contribution to the development of SME in China, wasan indispensable part to improve and perfect Chinese financial system and made upthe deficiencies of the current financial system in the allocation of funds. However,everything had two sides. The disorderly development of private lending was likely tocause the debt crisis, social stability and the safety of financial markets which had anegative impact on Chinese economic development. The Chinese government hadoverly strict financial controls on the private lending implement for a long time, waslack of specific legislation on private lending, suppressed and combated privatelending activities strictly. This was not only not conducive to Chinese current reformof the financial system but also forced a large number of private lending forms tobecome the underground financial walking in the legal and illegal edge and wasunable to get effective governmental supervision and guidance. How to give privatelending an appropriate evaluation and social status, how to make rules and norms andguide their healthy development had become social problems to be solved.Based on profiling the characteristics and causes of private lending and the prosand cons of economic development, combining the wide range of social thinkingtriggered by “Wu Ying Case”, propose the private lending should be on the“sunshine” and “standardized" and provide countermeasures and suggestions ofChinese financial supervision of private lending on this basis. This thesis was dividedinto four parts.Part One—“Private Lending Overview”, define the concept of private lendingfrom both the legal relationship and financial supervision, discriminate the concept ofprivate lending from the view of the finance and generally introduce the main form ofprivate lending.Part Two—“Development Status of Chinese Private Lending”, analyze theexisting reasons for Chinese private lending and development features revealed intoday’s economic environment. Fully elaborate the active and significant contribution made by private lending in Chinese economic development as well as analyze thenegative impact of private lending on Chinese economic development.Part Three—“Issues in Legal Regulations of Private Lending”, from a widerange of social thinking and debate triggered by “Wu Ying Case” and discuss theexisting legal system defects of Chinese private lending. First of all, the governmenthad too strict financial controls on the private lending which embodied in: Thehigh-intensed financial control banned the legal existing space of private lendinglegally; The Chinese government had a strict suppress and combat on private lendingactivities for a long time; The lack of the long term and effective supervision andguide; Private lending saddled with too harsh liability. Second, Chinese legal systemof private lending was imperfect: Legal norms of current private lending wereobviously inadequate with poor coordination, existed the phenomenon of seriousconflicting legal norms on the different ranks; Legal norms seriously lagged behind intoday’s development status of private lending that many private lending disputescould not be resolved through legal channels.Part Four—“Countermeasures and Recommendations of Legal Regulations ofthe Chinese Private Lending”, which were the focus of this thesis. For the issues oflegal regulations of private lending in Part3, ideas to improve our legal regulations ofprivate lending were sorted out. First, recognize the private lending activity legally,give its legal status, bring lending into the financial supervision system and create theequal financial market environment the same as formal finance. Second, thegovernment should change their ideas on the management of private lending, relaxthe financial controls appropriately to the private lending and strengthen financialsupervision and guide to activities of private lending. Adhere to treat the differentmanifestations of private lending in the regulatory distinction, reduce legalrestrictions and intervention on the activities of personal historical long-termborrowings and reserve for enough space. The formed scale of borrowing form and itsorganization should be set up specialized laws to regulate and supervise. Finally, thecurrent private lending legal system should be improved; modify the conflictprovisions contrary to the reality legally; Coordinate the conflicts between thedifferent ranks on legal norms; make the special legislation of private lending to make up the inadequate law in the private lending activities. The long term and effectiveregulation system of private lending activities should be established.