background
From the Xia and Shang Dynasties more than 2000 BC, to the unification of currency in Qin Dynasty and then to the prosperous Tang Dynasty in China, with the national unification and economic development, folk finance with folk credit as the main form became increasingly prosperous. Especially in the Ming and Qing Dynasties, China's folk credit reached a climax. At that time, there were no government-run financial institutions, and basically private financial institutions played a role in currency trading and circulation. Pawnshops are dominant in rural areas, while pawnshops, banks and banks are dominant in cities.
Private finance in China has existed for 4000 years, with a long history and prosperity. In particular, Shanxi's financial industry in modern times represented the highest level of world finance at that time. In the era when the private financial industry was dominant, there were no major financial risks and financial fraud, and the private financial order was generally good.
As the saying goes, "if you don't cut a jade, you can't cut it." If jade is not cut, it may be lost in gravel or rocks for a long time and never see the light of day. This is true of natural resources, and so is social resources. Although folk finance is not very important in today's financial resources, it has made a good contribution. However, due to its exposed defects, introverted nature and long-term discrimination, it often becomes the object of rectifying the financial order. However, the form of private finance is not only limited to allowing private capital to set up banks and carry out debt investment business such as private lending, but more importantly, it is necessary to mobilize private capital to use emerging financial instruments such as private equity investment funds and venture capital funds to set up a unique operating mechanism, which may be an effective way for private finance to break through!
brief introduction
Professor Zhang Xuejun of Fudan University defines folk finance as a part of folk credit spontaneously formed relative to the official formal financial system and banking organizations. This definition explains the informality of private finance, but it does not clarify the meaning of private finance, and the official is also very vague.
Gillis believes that private finance refers to informal financial organizations that are not included in the national financial management system. The definition of non-governmental finance is based on whether it is included in the national financial management system, which makes clear the non-regulatory nature of non-governmental finance. But there are problems in actual operation. Many financial institutions are approved by local government departments and registered in the industrial and commercial administration departments, but they are not under the management of the national financial institution management system, so it is obviously unreasonable to classify them as private finance.
On the basis of the above definition, Gao Fa believes that private finance refers to an organization that is not registered in the industrial and commercial sector and engaged in financing activities relative to formal finance. Mainly include: private lending, private fund-raising, underground banks, cooperatives and so on.
The central bank believes that compared with financial institutions approved by the state according to law, it generally refers to the value transfer and principal and interest payment between natural persons, enterprises and other economic entities (except finance) of non-financial institutions.
Private finance is relative to official finance. Official finance belongs to the formal financial system, that is, financial activities managed by China's financial supervision departments. Therefore, folk finance mainly refers to the financing activities of economic entities other than China's bank insurance system, securities market and rural credit cooperatives, and belongs to the category of informal finance (unobserved finance).
Specifically, private finance has the following meanings:
(1) From the perspective of the subjects of trading activities, the counterparties of trading are basically economic subjects who cannot obtain financing arrangements from the formal financial sector, such as farmers who borrow from each other, and entrepreneurial enterprises obtain venture capital.
(2) The transaction object is a non-standardized contractual financial instrument that is not recognized by formal finance.
(3) Formal financial intermediaries have standardized institutions and fixed business premises, while private finance generally does not have these characteristics.