Research On That Informal Finance Promotes Economic Development In Anhui

With the deepening of the reform of the financial system, diverse financial needs of gradually appeared. Informal financial markets have its inherent strong economic resilience and vitality, and it became the focus of attention in recent years in China’s financial industry, and even a important topic within the scope of the theory and practice of the world.Since the reform and opening, China have developed quickly in economy.Corresponding large increase in demand, China’s economy has experienced rapid development of China’s financial. However the supply of formal financial can’t supply sufficient fund.As a powerful formal financial supplementary, private financial organizations and activities gradually began to regain active. It eased the contradiction between supply and demand of funds in the financial markets and improved resource allocation and funding of social efficiency, operation of the financial system. Informal finance became more and more important for economy in China. What’s more, informal finance offers a indispensable financial support to the progressive reforms.At present, informal finance is developing and expanding rapidly in Anhui province.Informal finance is so flexible and has diverse organizational forms, including private lending, RCAs, private funds, rural cooperative foundations, private banks and silver back, diverse pawn. It largely alleviates the problem of financing difficulties of SMEs and provides financial support in promoting private economic developmentlnformal finance makes a great contribution to the financial markets, but there is a structural problem and not unreasonable norms. Therefore, it has has great significance to play a positive impact on to economic development and avoid its negative effects.This paper introduces the Review of research on informal finance in the context of the development of informal finance, including the definition of informal finance, the reasons for informal finance interest rate, relationships between informal finance and the macroeconomic development and the formal financial. After elaborating financial repression, financial deepening, asymmetric information and other basic theories, the author estimates of the size of Anhui financial from1993to2012in the method of θ indirect valuation. It shows that compared with the stable growth of the informal financial,Informal finance grows fluctuate.Then use the size of private financial and GDP data to analyze the relationship between informal finance development and economic development. Empirical analysis proves that informal finance and economic growth in Anhui Province is a long-term stable equilibrium relationship. Every one percentage point change in informal finance changes0.57percentage points in GDP in the same direction. Granger causality test shows that informal finance is Granger cause of economic growth economic growth is also Granger cause of informal finance. Informal finance promotes the development of economic growth and, economic growth increase significantly the demand for financing in turn,thus promoting the development of informal finance.Informal finance eases the financing problems of SMEs,. and promotes the development of SMEs and thus promotes economic development, improves the efficiency of the allocation of social resources, optimizes the financing structure of society, the formal financial supplement certain extent, improves the competitiveness of the financial system. Empirical analysis also demonstrates that the development of informal finance in Anhui promotes social and economic development, However, at the same time, informal finance impacts government regulation of the economy, and implementation of industrial policy. Due to the informal finance organizations, higher business risk, it increases the risk of the financial markets.Informal finance may breed criminal activities to affect social stability.We should promote a correct understanding of the role of informal finance in Anhui Province on economic growth.Simultaneously we should knows the negative impact of informal finance on society and the economy, regulate informal finance, have a beneficial impact on economic development, this paper proposes to regulate informal finance to promote economic.First, strengthen legal framework for informal finance, enter into the relevant laws and regulations on informal finance to allow informal finance sunlight and legalize. Second, establish effective private financial regulatory system.Third, regulate private financial internal control mechanisms. Finally, we should promote market-oriented interest rate reform and create a favorable environment for the development of informal finance. Only by guiding private financing correctly and avoiding its adverse effects, can it really play a role in promoting economic growth.