Mao Yushi: How Do We Look At Private Lending?

Recently, the whole

The first reason for the discredit of private lending is that the interest rate is so high that many enterprises are bankrupt.

The high interest rate is not good.

This is the next point.

As for the failure of it, all things went against it.

If an enterprise borrows money, it will go bankrupt. Can't it go bankrupt without money?

In fact, private lending has avoided the bankruptcy of many small and medium-sized enterprises, rather than the other way around.

Because of the rigid system of big banks, they could not finance small and medium-sized enterprises. Unfortunately, they failed and finally dragged down big banks.

So big banks hope that private lending can help SMEs get out of trouble.

It is groundless to cause more bankruptcies due to private lending.

The second reason is that private lending is full of risks, and the consequences are unthinkable.

This statement is entirely taken for granted.

In fact, private lending is the most risk-free financial business, because they are all one to one lending relationships. If a breach of contract involves only two people, it will never affect others.

Unlike large financial institutions, they will involve a wide range of businesses. Once they fail, a chain reaction will occur, resulting in bankruptcy in large areas.

And experience has proved that the rate of breach of private lending is far less than what everyone envisages.

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The third is the erroneous description of interest rate and inappropriate exaggeration of the harm of usury.

The interest rate is as high as 180% (annual interest rate), which is a case in point.

As far as I know, interest rates are generally about 30% today.

This kind of loan is short term, a few days, a few weeks, at most half a year.

They are used in a very urgent way at the margins.

For example, most of the funds have been made, and there is still a small shortage.

Without this small sum, all funds will not work.

So the owner can bear a higher interest rate.

The interest rate of private lending and the profit rate of enterprises are two kinds of funds with no comparable nature.

And private lending is mostly high quality.

The only disadvantage of private lending is that interest rates are too high and become usury.

There are three reasons for this phenomenon.

First of all, information communication is not enough.

Obviously, low interest funds are available, but the supply and demand can not be communicated, borrowing high interest funds.

This phenomenon can now be solved by using the Internet.

For example, the borrower can post on the Internet, explain how much money you have, how long it can be, how long the interest rate is, how much the interest rate is, and ask the borrower; the borrower can also send a post to explain how much money you need, how long and how much interest rates you would be willing to pay.

The pparency of both sides can not deceive anyone, and the average interest rate of supply and demand can be found online.

The second reason for high interest rates is that the supply of borrowers is too small, and the limited supply of funds can not meet the needs of the borrowers.

The solution is to encourage more people to participate in private lending.

Our banks have more than 20 trillion savings, they can only enjoy less than 4% interest on deposits.

If there is a reasonable interest rate, they will participate in the loan.

The interest rate will definitely come down.

The third reason is that the lender is not at ease about the security of the loan.

This is difficult to solve.

Originally, the financial industry is risky and can not be foolproof.

I advise those who have savings to take a risk cautiously and break through a way to raise their income.

It is considered that private lending is exploitation, which is a very important obstacle to the development of private lending.

The reason for its exploitation is "nothing for nothing".

But we should know that the whole financial industry is just for nothing. People in the financial industry do not engage in productive labor, but they earn a lot of money.

If the financial industry earns money, it should shut down the financial industry.

In the modern economics theory, the money earned by the financial industry is the creation of wealth, because it pfers money to the most effective place.

The entire financial sector, whether banks, securities, insurance, or stocks, is designed to increase the value of money.

An effective financial industry can avoid taking the money in the wrong place to support the loss making projects, engage in performance projects, and do repetitive or inefficient construction.

Private lending can meet these conditions, which is worth promoting.

It helps enterprises to promote production, and also increases their income. It is the creation of wealth and is beneficial to the whole society.

China's implementation of ultra-low deposit interest and inefficient use of grant funds are not conducive to the governance of the bubble economy and the exploitation of the depositors' due benefits.

It has been calculated that the losses created by wealth can amount to hundreds of billions of dollars per year.

Many people appeal that our banks should attach importance to the financing of SMEs.

But this kind of call has been talked for more than ten years without improvement.

The reason is that there is division of labor within the same banking sector.

Big banks only serve big enterprises.

Only small banks can serve small businesses.

Our country has not registered the small private banks so far, so the financing problem of small and medium-sized enterprises can not be solved.

Under this condition, liberalization of private lending is the only way to solve the financing difficulties of SMEs.

As to whether the private lending is legal, I think the government has no right to interfere in lending between individuals.

Now, "four times the legal interest rate is regarded as usury and not protected by law". I do not understand how the four times rule is calculated.

Why is it less good than four times, and if it goes beyond it, it will go bad?

I have reason to suspect that this rule is entirely based on the head, and it is groundless and should be abolished immediately.

As long as the supply of funds is sufficient, the interest rate will naturally drop.

In short, we must eliminate all obstacles that are not conducive to the development of private lending, and fundamentally improve the overall efficiency of China's financial industry.