An Empirical Study On The Influencing Factors Of Private Lending Rate

Private finance refers to the indirect financing provided by informal finance department, and the direct financing between individuals or between individuals and business owners. Although there are many reasons for the emergence and development of the Private finance activities, it is one of the important reasons that the Lack of current supply of the formal financial system structure in China. As far as Zhejiang, rapid economic growth, strong demand for funds, formal financial difficulties in meeting the growing demands for funds, Folk finance plays an important substitution role in the economic develop ment of Zhejiang, and it is an important supplement to improve our finan cial system. Interest rate is the key index of the optimal allocation of financial resources, the private financial interest rate as the core index of the private finance, and it reflects the operation of the folk finance. Therefore, the research on the formation mechanism of the private financial interest rate plays an important role in the function of the private finance.Firstly, based on the theory of interest rate decision on the interest rate of private lending in the domestic and foreign empirical analysis; Secondly, based on the investigation data of Zhejiang Province, analysis the characteristics of the private lending rate and the interest rate trend in recent years. And then on the theoretical analysis and empirically analyzes of the private lending rate. The empirical analysis of the private lending rate is carried out on the basis of Wang Yi Ming and Li MinBo (2005), choose a small loan company in Zhejiang Province in 2013 a sample of research data using multiple regression models and empirical analysis on the micro-level. Part Ⅱ based on the Wenzhou’s private lending market, a case study of Wenzhou data, to build the VAR model, analyzed the deposit reserve rate, loans growth, resident CPI influence on folk debit and credit interest rates, according to research findings, the paper gives the corresponding policy recommendations.Results showed that:the formal financial interest rate, yield, loan size and interest rate are significant positive correlation, transaction cost and private lending interest rate is not strong, bargaining capacity index in the of business capacity, and credit status level and civil borrowing interest rate significantly are related, loan guarantees way and civil borrowing interest rate significantly negative related, Regional factor analysis:the low interest rate of private lending in the developed areas of Zhejiang Province, the high interest rate of private lending in underdeveloped areas; Based on Wenzhou private lending market:the raising the deposit reserve ratio, CPI rise residents will have a huge impact on the private lending interest rates, while the loan growth rate, housing sales price index for private lending interest rate shock isn’t strong.In view of the above conclusions, we believe that we should strengthen debit and credit guarantee mechanism, the establishment of risk-averse system, to serve the real economy, actively developing on track financial micro-credit, to actively promote interest rate liberalization.