Formal Finance, Informal Finance and Private Listed Enterprises' Bank Loan Defaults

In this paper, the effect of formal finance and informal finance on bank loan defaults of private enterprises are examined by Logistic regression. The results showed that: First, the higher the level of the formal financial development, the lower the default rate of bank loan of the private enterprises in the region. Second, the higher the level of the informal financial development in the region, the lower the bank loan default rate of the private enterprises in the region. Third, in areas with higher levels of formal financial development, financial institutions can just control the quality of loans, thereby reducing the default of bank loans of private enterprises. Fourth, in areas with high level of informal financial development, informal finance to give private enterprise financing convenience, more to meet the demand for funds, so as to reduce the demand of the private enterprise to bank loans, thereby reducing the loan default. Fifth, these results enrich the study of the relationship both formal finance and informal finance between fast private enterprise developments in the China, and also provide theoretical and empirical basis for further promoting the standardization of corporate financing behavior and promoting the healthy development of the capital market.