Research Of The Impact Of Market-oriented Interest Rate Of Loans On Formal Countryside Finance And Informal Countryside Finance

With the rapid rise of new rural financial institutions,in recent years,process of the market-oriented interest rate reform was accelerating.On the basis of continuously expanding the floating range of loan interest rates,in July 2013 the loan interest rate achieved all-round marketization,and rural financial development has taken a historic step.But in most developing countries,the rural credit market is mainly composed of the formal financial sector and the informal financial sector.These two departments have long been a strong competition,cooperation and complementary relationship,and the government often introduced policies to suppress the status of informal finance in rural areas.But the effect is not significant,and even some policies could contribute to the development of informal finance.As a very important exogenous shock,the effect of full marketization of rural formal financial lending rates on formal and informal finance is omnidirectional.According to China's economic reality over the past decade,this paper is based on the existing literature,discussing the mechanism and effect of marketization of loan interest rate on rural informal and informal finance.First of all,we refine the modern rural informal and informal financial institutions interaction mechanism theory based on incomplete information,think about the endogenous effect of technology which has not been considered by other scholars in the theoretical framework of the study,and show the loan interest rate marketization process more reasonablely to some extent.And then we excavate from the data in the past decade about the basic facts of formal and informal financial development,and use the econometric model to verify the substitution effect and alternative mechanism of the formal finance to the informal finance caused by the marketization of the loan interest rate.Finally,we discuss whether the perfection of the rural financial market is more significant than the marketization of the loan interest rate to the rural financial structure.According to theoretical framework analysis and measurement empiricalresearch,this article made the conclusion below:(1)The marketization of China's loan interest rate can be divided into three stages: rapid interest rate growth period,interest rate fluctuation period and interest rate stabilization period,and the marketization of loan interest rate has great influence on the development of formal and informal finance in the three stages,but there is a certain difference;(2)In the process of gradual interest rate marketization,this paper proposes that the relationship between formal finance and informal finance is the superposition of the three effects of the nominal income effect,the borrower's type worsening effect and the technology endogenous effect.Under the combined effect of the three effects,the substitution effect of formal finance on informal finance is inverted U-shaped;(3)In the study of the impact of the marketization of loan interest rates on the relationship between formal and informal finance,this paper finds that information asymmetry is a factor that affects the structure of rural finance more effectively than interest rate marketization.According to the conclusion of the study,we get the corresponding economic policy implications:(1)After estimating the interest rate trend of the loan,we need use interest rate risk alarm system to control interest rates;(2)After evaluating the borrowing farmers comprehensively,the financial institutions can give the acceptable borrowing period;(3)We need use of contemporary large data technology for credit data standardization and connecting the information around.Due to the limitations of the author's knowledge reserves and available data samples,this paper points out the shortcomings in the final.