Discussion On Causes Of The Distortion Of Non-Governmental Financial System

As a part of the finance system, non-governmental finance has existed in our country for a very long time and it plays an indispensible role in the development of our economy. Wenzhou is the earliest region to carry out marketization and privatization with very developed private economy. The industrial output value of small and medium-sized private enterprises accounted for more than95percent of the total industrial output value in Wenzhou. However, it is very hard for the small and medium-sized private enterprises to have credit from banks, what they can get from finance is so ill matched with what they have done for the economy. Under such circumstance, they can only turn to non-governmental finance for help, thus, private lending becomes the main source of their loan fund. Although non-governmental finance support a large number of private enterprises, it still can’t get recognition from formal legal and activate at the edge of financial legal system. Because non-governmental finance didn’t under the protection of the law, so it has under forced intervention during its development which made it deviate from its normal developed path. And because of lack of legal supervision, the operation of non-governmental finance is relatively in a mass and has suffered a lot of damage from private unethical behavior.The credit crisis happened in Wenzhou in2011has made non-governmental finance been our focus, the regularization and the publication of the non-governmental finance become the main direction of the financial reform. And Wenzhou was authorized to become the financial comprehensive reform pilot area which made the reform of non-governmental finance more expected. However, we must realize that the financial reform is not just for resolve this credit crisis, but more important is to prevent it happens again. And if we want to reform the finance fundamentally, we must reform financial system from central authorities to local government, for only normal evolution of financial system can prevent crisis. The healthy development of non-governmental finance need matched system circumstance, it is urgent to form the lawful system of non-governmental finance.This paper is divided into four chapters, taking Wenzhou as the example and Wenzhou credit crisis as the clues to discuss the causes of the distortion of non-governmental finance system. The second chapter is the theory part, mainly discussed about two premise of the formation of lawful system. At first, the author stated the properties of the system, indicated that the system is a kind of "invisible means", and is the link between one and the others. Then the author stated two criterions of judging lawful systems, that is to promote freedom and to coordinate with other social systems. According to these two criterions, the author come up with the premise of constructing lawful system, that is the spontaneous evolution of the system and abide by the general rules. Because of human beings’limited rational, that is,"human beings’ eternal ignorance for factual knowledge", we are unable to construct complex systems. So lawful systems must be spontaneous evolutes, and abide by the general rules is the premise of spontaneous evolution of the system.The third chapter take Wenzhou as the example to discuss the distortion of non-governmental financial system and the reason. First the author uses some data to state the status of the non-governmental financial development in Wenzhou and the truth of the distortion of financial system. Then through the comparison with the Hong Kong financial system, the author analysis the shortage of financial system in Wenzhou and point out that the main reason of the distortion of financial system in Wenzhou is that it lacks free market environment with so much intervention. Furthermore, the author discusses the reason of the distortion of financial system in Wenzhou, that is forced intervention and didn’t follow the general rules. The last, the author analysis why the distortion of financial system would bring economic crisis, the distortion of financial system brought by forced intervention will make the production structure be distorted, and the distortion of production structure is the essential reason for economic crisis.The Forth chapter mainly talks about the possible way to make non-governmental financial system return to normal, and make an outlook for financial comprehensive reform pilot area in Wenzhou. First, according to the above analysis, pointing out that the way of non-governmental financial system to return to normal are eliminating forced intervention and regression ethics. Then the author discusses the appropriate financial supervision and supervision boundary, pointing out that supervision is not equal to control, the appropriate financial supervision should make sure the spontaneous operation of financial rules and the supervision can’t beyond the limits provided by law. Then the author discusses the construction and prospect of financial comprehensive reform pilot area in Wenzhou, it was put forward under the circumstance of credit crisis, is a reform from central to local caused by needs from local to central, reflecting the folk appeals. However, we need to let financiers to explore the suitable rules, at the same time, strengthen the construction of the credit society, the moral society and the law-governed society. Only the harmonized social system can make the financial comprehensive reform pilot be the paradise to financial reform. The last is a conclusion to this paper.Most research about financial system is from neoinstitutional economic view, but this paper mainly uses Austrian economic to discuss the construct of lawful non-governmental financial system. In general, it analysis the reason of the distortion of non-governmental financial system comprehensively, point out that it needs to eliminate forced intervention and regression ethics to form lawful non-governmental financial system, emphasizing the importance of spontaneous evolution of the system.