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Economic Analysis of private credit

Abstract: The private credit is to promote private economic development and the use of private funds to increase economic growth a major thrust of financing in the form, the study of private credit is significant. Come from both positive and negative economic effects of private utility, private credit proposal to promote the rational development of strategies to promote the development and improvement of private credit, and promote the rapid development of market economy. Keywords: private credit; effect analysis; Countermeasure 1 main causes of private credit (1) to increase private wealth is fundamental. Reform and opening up 20 years, with China's rapid economic development and economic strength, both the production enterprises or individual workers accumulate freely dispose of their income, so that the size of a huge amount of idle funds swimming, forming a source of private credit financing. As long as this source is increasing, the size of the financing of private credit is bound to increase, it is an objective reality. Chinese papers League finishing. (2) diversification of ownership of private credit boom is one reason. After the reforms, the original plan when the economy is almost turning into a single collective state-run economy, individual, mixed, foreign or joint ventures such as the coexistence of diverse forms of ownership were long, and is equal in law. Contracting system of state-owned enterprises at the same time, smaller internal accounting system, the department expanded relative autonomy, all units of capital surplus and deficiency increases the difference in opportunities for expansion and transfers surplus and deficiency, which is the financing of enterprises to each other basis. (3) financial policies, financial institutions and other reasons, propelled the expansion of private financing. In recent years, rapid income growth of urban and rural residents, more money is also a tough one. Deposit interest rates too low (actually negative interest rates), plus interest tax, most people do not want to deposit my heart, but can not store large amounts of cash at home, so to reach a satisfactory condition in the loan and for others who need loans to said that banks, credit unions loan terms, limits, approval procedures, the return time, and so difficult to achieve secured collateral requirements, and therefore turn to the private loan financing. Objective to form a rich do not want to bank deposits, do not want to use the money to the bank borrowings of contradictions. Resolve these contradictions is that friends and family, man in the interests of equality between brothers under the conditions of transfers surplus and deficiency, which led to the objective reality of the rapid development of private credit financing. 2 private credit in the social and economic utility analysis 2.1 Analysis of the positive effects of private credit (1) help alleviate the contradiction between supply and demand for credit funds. Because of the country's financial sector institutions and policies, credit, invest, both in quantity, structure, or the services are far from meeting the needs of social and economic development. While private lending has a great flexibility in financial gap constantly adjust their actions and, in particular, to promote rural products can not be underestimated role. Market economy is the commodity economy, the commodity economy is the currency of credit economy. Commodity production, circulation and consumption processes are accompanied by the movement of currency and credit support. This process shows the whereabouts of the complex trajectories, and because of natural, human factors, logistics and cash flow led in time and space and have a greater geographical asymmetry, which need to be in the form of credit facilities, in order to make this process to continue uninterrupted. Meanwhile, bank credit, commercial credit, national credit and other forms of credit are important of course, but these forms has its own requirements of credit conditions, and these conditions are harsh non-economic factors, so that part is difficult to meet the needs of those who shape not a transaction. In this case, private credit financing is always the best role to play to. (2) help to improve the utilization of factors of production. In a market economy, the flow of various factors of production and re-configure the way through the market exchange to achieve, must be the medium of financial flows, with changes in commodity supply and demand, profit opportunities and are constantly changing the extent necessary, the amount of funding is a prerequisite for profitable opportunities, but the distribution of funds to achieve the distribution and profit opportunities are often not consistent, unified only by the two movements of funds to boost production, labor, technology, information, and other production elements the flow to achieve. Liquidity in the market interest rate mechanism of private lending under the effect of social idle capital market financing has great effect, accelerate the accumulation of private capital, thereby promoting the rational allocation of production factors and optimization. (3) is conducive to economic restructuring. Market economic rules of the game (the most general word is survival of the fittest. The winner must be the product competitive, prosperous-effective production and marketing, a good foundation to expand production, and this type of product and business, it is also the financing of private credit best of) like, who better to promote optimal development. Conversely, products and enterprises lack competitiveness in the market, is bound to failure, for which private credit also to avoid the operation of the. This result is to promote high-tech, low-cost, high efficiency products and enterprises continue to expand the offering, and high-cost, low-quality products and enterprises be eliminated,[link widoczny dla zalogowanych], thereby optimizing the industrial structure of a large area. (4) financial environment conducive to the formation. Benign financial environment, is generally rational economic structure, more perfect the market mechanism, a strong sense of the rule of law, strong sense of credit. This environment is conducive to survival and development of the financial industry, there are also conducive to the development of private credit financing. Speaking from the backward reasoning, in reality, a region a good momentum of development of private credit financing large scale, but also disproved the regional financial ecological environment is superior. Thus, we can not fear the area of private credit boom, but should promote its prosperity.