Folk Credit Market Position Problem Research In China

Since the reform and opening up, the folk economy has developed rapidly. At thesame time，Reform of the financial system and folk financial institutions has laggedfar behind the development of the folk economy. Surface with phenomena such asunderground banking, illegal fund-raising have not been banned and financingdifficulty of small and medium enterprises is increasingly difficult to resolve. Actually,the real problem is the imbalance of financial resource allocation mechanism andexposure in some respects is out of control. It’s pleased to see that the joint-stockbanks in the past10years have been growing rapidly and private financial institutionshave got a lot of the survival and development of space, accompanying with theestablishment of the financial reform pilot area in Wenzhou. In the current economictransformation, folk credit is out of the dual structure of financial repression. Folkcredit is not only the complement of the formal financial, but also plays the role of thenew generation of financial institutions to optimize the allocation of financialresources.The paper quotes the basic theory of Chinese and foreign economists on privatelending and documentation points, also demonstrates the emergence and developmentcontext of the folk credit. The author chooses Wenzhou gross domestic product (GDP)as the dependent variable, folk investment and state-owned investment as independentvariables, total retail sales of social consumer goods, local financial budgetaryexpenditure and net export as control variables, making a detailed empirical analysis.Basing on empirical research, the paper tries to reveal the status of private creditcontributed in the development of the real economy and the vitality to survive as anew generation of financial institutions. This article also lists the apparentcharacteristics of exposure in order to put forward specific proposals with integrationof the existing regulatory resources to system of risk prevention. Layer logicalanalysis and empirical combination is dominant throughout.