A Survey On The Current Development Status And The Influential Factors Of The Private Lending Regulations In China

China’s economic structure shows significant binary state. At present, domestic scholars do a lot of surveys on private lending in economically developed regions like Guangdong Province, Wenzhou, Ordos, etc. But it’s almost blank for the surveys on the regions with under-developed financial systems.In 2011, the courts of Henan province have accepted 24,201 private lending cases. While this static soared to 100,000 cases in 2015, which is over 4 times compared to 2011 within 4 years. The above data indirectly indicates that the private lending in Henan is not just a "spark", but a rapidly growing and very tough problem in Henan’s economic and financial activities.Firstly, this paper presents the analysis of private lending development in Henan Province, the characteristics and causes of the rapid development. Then the Indirect Coefficient and Valuation Methods are applied to size up the scale of the private lendings. According to the growing features and changing trends, it discovers that the growing peak period is corresponding to the fast growing period of the real estate rates. By applying tests and co-integration tests with augmented Dickey–Fuller test(ADF) method, we conclude the positive correlation between real estate and private lending. Finally Granger causality test is applied to find whetherthere is a causal relationship between them.The conclusions are as below: 1) Ever since 2002, the GDP, regular finance and private lending are showing upward trend. The scale of private lending is not far from the regular finance scale. The development of the private loaning requires survey in depth. 2) Starting from real estate industry, we analyze the private lending capital flows in Henan Province and find there is a long-term stable equilibrium relationship between the private lending development and real estate prices. And when the real estate price Increases with logarithmic growth by 1 economic unit, the scale of private lending will increase by 15 economic units. 3) By using the Granger Causality Test, we find the real estate price is the Granger causality of the scale of the private lending while the scale of private lending is not the Granger causality of the real estate price. As a result, the private lending grows rapidly when real estate price soars, while the real estate price stay stable when the private lending collapses. Finally, we make conclusions on the private lending in Henan and presenting suggestions for controlling the financial risks and guiding the healthy development of the private lending in Henan.