A Study Of Normative Development Of Private Financing In China

With the reform and opening-up policy,the small and medium-sized enterprises have become important forces to promote the economy in China.During process of development,the small and medium-sized enterprises are faced up with the difficulty of financing all the time.When failing to get fund from official ways such as bank lending or security market,some of them have to turn to private financing.By this way,they have got rapid development playing an important role in promoting national economy.However,this way at the same time could cause serious social problems.When it comes to capital chain rupture,it will set off a chain reaction such as leading families and individual investors to be caught in plenty of disputes with financing parties,which is difficult to resolve,thus undermining the social stability.Z Company in this article ran its business on private financing in the later stage,but due to poor management its debts increased largely,getting into capital chain rupture in the end.Then Z Company declared bankruptcy and investors could not get their money back.This article introduces the way how Z Company utilized private financing and how it developed.Then it discusses the difference between private financing and illegal fund-raising and puts forward the problems facing private financing.In the end,it raises proposals on how to prevent these problems.This article creatively brings forward suggestions to regulate private financing in China as follows:Improve the legal system of private financing;Strengthen the super,vision of private financing;Specifically define illegal fund-raising;Strengthen relative education and disclosure of risk to investors;Advertisement of private financing on relevant media should be prohibited;Establish a personal bankruptcy system with limited conditions.