Wenzhou Private Finance Local Supervision System Research

Wenzhou is a region with well-developed private economy. Informal finance plays a great role in promoting early development of its private economy. However, as private enterprises evolve towards modern enterprises, their transformation and upgrading in the areas of size, industrial structure, corporate governance and so on have put forward new demands on informal finance. At the same time, informal finance which is usually based on geographical and genetic relationships has its internal defects in the lack of formal contract rules, and therefore contains great economic risk, easy to lead to the local ’financial disaster". Therefore, how to regulate, formalize and guide formal finance effectively in the context of our institutional environment and the changing process of economic transformation has become a topic of central concern.In this thesis, we first explore informal finance related theories, and then followed by a detailed analysis of the development of wenzhou informal finance including its present situation and main features. By using a questionnaire survey, we discusses the supply and demand situation for informal capital in Wenzhou and public attitude towards its regulation. Based on the analysis on the current local supervision of informal finance, the existing problems have been summarised. In full consideration of Wenzhou’s local economic characteristics, this thesis proposes a construction scheme for a Wenzhou informal finance local regulatory system, including organization system, monitoring index system, laws and regulations system, as well as the corresponding guarantee mechanisms such as information sharing mechanism between administrative supervisers and industrial regulators and the small and medium-sized enterprise credit system. The thesis aims to provide constructive advices for informal finance’s formalisation and develoment.