Q: What is the development status of folk credit in China?

Folk credit has a long history of development in China, and it exists widely in rural areas. Farmers' temporary capital needs are all solved through folk credit channels. After the reform and opening up, not only farmers' commercial and sideline funds need to be supplemented to folk credit, but also some individual industrial and commercial households, collective enterprises, township enterprises and urban private enterprises need various operating funds. In the case that state-owned commercial banks mainly lend to state-owned enterprises, folk credit mostly solves it through folk credit. After the 1990s, private credit has been extended to various investment fields, such as building factories and even stock trading.

Because of the high interest rate in folk credit (usually higher than bank deposits and loans 10 percentage point), it has caused great pressure on banks and credit cooperatives to absorb deposits; Because of its flexible and convenient loan mechanism, it also has advantages over banks in winning good loan projects, which constitutes an impact on normal bank credit to a certain extent. Therefore, folk credit in China has both its objective environment of existence and development and its worrying negative effects. How to strengthen the guidance and management of folk credit is an urgent problem to be solved by the financial supervision authorities. Relevant laws and regulations should be formulated and promulgated as soon as possible to determine the legal form of folk credit and the responsibilities and rights of the supervision institutions. This will be conducive to the all-round development of China's financial system and provide all-round financial services for economic entities with different ownership.