The causes, risks and countermeasure of private lending in China

Abstract

Private lending has a long history in China and to some extent, private lending has indeed facilitated our life. However, with the continuous development of China’s economy, private lending exposes more and more problems. Consequently, it’s important to know the private lending in depth especially after the serious private lending crisis occurred in Wenzhou in 2011. In this way, this essay will try to find the relationship between the number of formal financial institutions and the scale of private lending in China. Model is created based on literature review and other scholars’ study. In this essay the methodology that be used is correlation and regression analysis. This essay uses the economic and financial correlation coefficient rule to estimate the scale of private lending. This essay uses insufficient data to do analyze and hence its result is inconsistent with many other scholars’ results. Depending on this contradictory consequence, some points are figured out to explain the reason and also some suggestions are mentioned in order to help or remind other researchers when they do relevant studies.