Research On Informal Finance On The Economic Growth And Industrial Structure

Over the years, the role of private finance in economic development and the support it got from the formal finance and government is inconsistent. In the process of economic development, informal finance as the supplement of formal financial, providing small and medium enterprises with financing needs, investing in China’s industrial structure transformation process into more areas, as that show informal finance make a positive impact on economic development and industrial structure adjustment.However, due to informal finance outside the financial regulation range, there are some non-standard and unsafe factors, especially the gray informal finance which have adverse effect on the whole financial market and society. So, the attitude of the Government’s to informal finance has not been evident. Beginning from banning to gradually rational treating, it has not legalize laws to give informal financial a lawful status.In two sessions of2012, Premier Wen Jiabao proposed the establishment of financial reform pilot area in Wenzhou City, which indicates that importance of informal finance has got attention. The great positive role of the informal financial is affirmed.The research of informal finance began early.The related theories of informal finance is complete. However, due to informal finance which is outside the financial regulator system, with hidden features, so there are some difficulties in the survey data and related empirical studies.So, this paper based on previous studies used the ingenious indirect estimation method with1994-2010years of statistical data to estimate the scale of China’s informal financial and do empirical research of the relationship between informal finance development with economic growth and industrial structure upgrading. The Conclusion can give a more comprehensive understanding of the role of informal finance, and has an important significance for the regulation pathway of improving the informal financial. The first part of this paper is summarized the domestic and international literature on informal finance and related theories. Then based on the theory, combined with China’s specific national conditions, re-combed the develop reasons and the role of informal financial in China. Then with the relative index method estimated the informal financial scale based on the establishment of relevant theoretical assumptions. Then we obtained the relationship between the China’s informal finance and economic growth from empirical research. Ultimately, we concluded that:there is a long-term relationship and a two-way causal relationship between the informal financial development and economic growth,proved that informal financial development promotes economic growth, economic growth also led the development of informal finance, confirmed the role of private finance in economic development. The research also concluded a conclusion which is not the same with the existing research that private finance will not disappear in economic development, but will continue to develop and improve.At the same time, we do empirical research between China’s informal financial and industrial structure upgrading, concluded that:a two-way causal relationship between informal finance and the secondary industry; a one-way causal relationship between the informal finance and the tertiary industry. Using national data confirmed nationwide informal finance have impact on the industrial structure upgrading can guide our financial practice. In the ongoing upgrading of industrial structure adjustment process, the government must strengthen the role of the informal financial industry-oriented, and guide their investment.Finally, we gave some suggestions based on the research conclusions, proposed to give the informal financial legalization platform and guide to promote the play of informal finance positive impact on economic growth and industrial restructuring.