The Evolution Path of Private Finance and the Transmission Mechanism of Credit Risk

Since the reform of economic system, the private finance, as a supplement to the financing channels of the Chinese financial system, has solved the contradiction between the huge demands of private economy for funds and the effective supply shortage of formal financial funds to some extent. But the private financial crisis since 2011 forms new challenges to the reform of the Chinese financial system, which indicates that the private finance has become an important factor to impact the development of regional economy and the financial stability. Therefore, when the private finance is gradually legalized, it's a realistic option to set a reasonable business range of private finance, effectively protect the legal rights and interests of creditors and debtors, reduce the market equilibrium interest rate of private finance, accelerate the improvement of financial service system,strengthen the governmental public support services, and actively explore the system equilibrium point of private finance in the new period.