A Research On The Symbiotic Relationships Of Formal And Informal Finance

World Development Report (1989) has pointed out that the joint between the formal and informal finance is one of the promising strategies in the financial system. Just like a vast majority of developing countries, there is a clear duality of economic structure in China. As to the financial sector, it reflects the symbiosis and co-existence between formal and informal finance. There are already signs that the informal finance is playing a more and more important role in China’s economic development, especially its increasing role in supporting the development of the small medium-sized enterprises (SMEs) and rural economy.In general, the relationships between the formal and informal finance involve complementarities, competitions, and mutual transformations. From the macro view of point, it reflects in the symbiotic relationship between the formal and informal finance. In order to illustrate the symbiotic relationship; there need to build up some indicators which determine it. Therefore, we build up the indicator system from the following5aspects:the compatibility of quality parameters, the formation of symbiotic model, the generation of new capacity, the choice of symbiotic interface, the evolution of symbiosis. And in the micro level, this paper provides a detailed analysis on the symbiotic relationship between the formal and inform finance, thus to outline the theoretical framework of it. Building up a Logistic Growth Model through empirical methods, the author obtains the desired data by fitting the curve that shows the formal and informal finance’s the environmental capacity for each other’density. Together with the indicators that determine the compatibility of the quality parameters, this paper has a regression analysis on the factors that influence the integration of formal and informal finance. And the analysis finds that there is a clear symbiotic relationship between them. After the calculation of the symbiotic degree, it concludes the symbiotic relationship between formal and informal financial is in an asymmetric reality. It also indicates that the model of cooperative symbiosis has much room for improvement. Combining the theoretical and empirical analysis, this paper put forward corresponding countermeasures and suggestions, separately on symbiotic environment, symbiotic unit, and symbiotic model and so on. Hopefully, this paper can offer a new idea or reference to build a healthy cooperative symbiotic relationship between the formal and informal finance. Meanwhile, the author hopes it adds a new thinking to increase the financial supply in theory for China.