Standardized Research On Chinese Informal Credit Behavior

The informal credit has been developing for thousands of years in China sinceZhou Dynasty. Now the informal credit transactions occur in most area of China andabsorb a large amount of funds. And the informal credit has been an indispensible partof domestic financial market. However, the informal credit in China is not normative atpresent. In2011, a series of informal credit issues occurred, and then more and moreacademics and publics turn their attention to informal credit. The informal credit marketcould absorb large amount of funds, its entry barrier is low and the transactions areconvenient. The informal credit market is an effective complement to formal financialsystem. Therefore, it is significant to study how to regulate the informal credit market inChina.The framework of this study is as followed. Firstly, on the base of literature reading,the author gave explanations about the exit of informal credit through modern contracttheory and institution change theory. Then, the problems of Chinese informal credithave been concluded, ratio control, regulation, risk control, lack of law, and illegality,all these problems need eager solution.The experience of Wenzhou and model of successful informal credit market inother region give us good example and correct orientation. In this study, the authornoticed that, with different history, tradition and economic development, the informalcredit markets are different, too. But some mutual factors are involved in all successfulinformal credit market. The author held the view that the problem of regulate subjects’behavior is in essence the problem of establish good institution. Therefore, in the fifthchapter, all the advices are proposed in three dimensions. On microscopic dimension,the government should give enough support, as well as deregulate ratio, refine law andchoose an appropriate supervisor. On market dimension, the structure of informal creditmarket may have three levels. In addition, public audit and credit disclosure platform should also be adopted. On supervision dimension, methods such as registration system,risk monitoring and insurance mechanism may be helpful.