Research On The Development Of Private Lending In Henan Province

The private lending is convenient and flexible. And the private lending attracts a large number ofsocial funds to make it into different areas. It enhances the flexibility of capital, enriches the whole market,and fills the gaps in the formal financial institutions. It can provide much money for the micro, small andmedium-sized enterprises and people in urgent need of funds.Through continuous development, the various parts of the world have already formed theirdifferent characteristics. Henan province is located in the Central Plains, and has a long history. Therefore,the whole province has distinct characteristics because of the agricultural economy and traditional culture.Of course, the private lending for Henan also shows different characteristics.Nowadays, the loan amount increases year by year in the limited time since the private lendingmarket was formed in Henan Province. What’s more, the majority of private lending activities can apply forthe money which the micro, small and medium-sized enterprises are looking for. At the same time, we findthere are some connections between individual creditors and debtors, which is they are familiar with eachother. We also find the informal financial institutions have some distinctive styles, such as family-runmanagement and relational loan. Private lending market in Henan dedicates the powerful support for capitalcirculation, provide guarantee for the micro, small and medium-sized enterprises, indirectly supply a lot ofjobs, enrich the development of various industries, and facilitate the development of the whole economicmarket.But as a coin has two sides, the private lending also has some defects. First of all, has not yetformed a stable market, private lending is stilling in the embryonic stage. Secondly, the size of informalfinancial institutions generally is small, and not enough. Then the competition of this field is in a state ofdisorder. Thirdly, private lending rates is out of control, frequent practice operation is not standard.Investigating the reason, it contains two sides: internal causes and external causes. On the onehand, the existence of usury is the fundamental cause of private lending, and the supply and requisitioningparties in the market offer the possibility for private lending activities. On the other hand, through thecurrent economic situation, we find that the inflation and policy tightening are more and more serious. Given all this, people are not satisfied with the simple bank savings, but to find a way to ensure the value oftheir own money. At the same time, thanks to the illusion of high profit, so private lending gets rapiddevelopment opportunities.In order to promote private lending market can be orderly operation, we need to perfect the lawsand regulations, and establish a monitoring system for private lending activities. Meanwhile, we can alsoneed to develop a perfect risk prevention mechanism, or move forward by establishing a cooperativefinancial group. The most important is that the main parties involved in private lending also need to changeidea, and keep a clear head. Only by positively self-discipline for each side can private lending be healthyand long-term development.