Research On Credit Environment And The Formal, Informal Finance Development

Finance promotes a country’s economic development as a bridge and link, andthe question of how its development has always become a hot field of economicresearch. Chinese economy has a rapid development in recent years and greatlystimulate domestic consumer demand, improve the income level, which making thefinance strong development momentum. At the same time, Chinese finance has madegreat progress, its counterproductive in economic growth, service needs of individualsand businesses also played a huge role. However, the development of Chinesefinancial system because of the late start, the economic and historical issues, showingmore complexity compared with other developed countries and most developingcountries. The finance divided into formal, non-formal finance, from financialregulation and legal protection. Its binary pattern and coexistence of development inour country was particularly prominent. And the ways to formal, non-formal financebecause of its mechanism of formation and different development can not beconfused.Previous studies on financial development mostly concentrated in the financialconstraints that the internal question of how the various internal developmentfinancial institutions. However with the external environment has played anincreasingly important role in promoting financial development process, more andmore scholars have paid attention to the credit environment research. The creditenvironment in the external environment as an informal soft environment to financialdevelopment play a more important role, but cost lower operating costs r compared toformal legal environment. This paper selects the proxy variables about the creditenvironment, the level of formal and informal financial development, collected2010-2012panel data. And Binding the legal environment and control variablesstudied the impact and the interact effects with the legal environment of the creditenvironment with panel data regression model. With two-stage least squares (2SLS)conducted a robustness analysis, regression analysis showed that the development ofChinese credit environment has a significant promotion for the formal development.But because the formal, non-formal alternative financial relations in our country, thecredit environment while promoting the formal financial development whileweakened the informal financial development. The interaction of credit environmentwith the legal environment for formal, non-formal financial development arepresented "alternative" and "complementary". In addition, this paper selected the proxy variables of political, economic, and cultural which impact of financialdevelopment as control variables, studied the effects control variables on thedevelopment of two forms finance. Finally this paper proposed policyrecommendations concerning dual financial system in the external environmentaccording to the results of theoretical analysis and empirical development.