As a supplementation to regular banking, private loan has risen as an important force our financial support to substantial economy by offering powerful support to development of mediumsize and petty enterprises and agriculture, hence certain necessity and reasonableness of its existence and development. However, the evolution of form and implication of private loan makes itself exercise significant effects on substantial economy and growth of regular banking. Since 2011, one problem in regional private financing has risen after another. The most typical problems occurred in Wenzhou and Ordos, which caused the breaking of capital chain of private financing, closing down of mediumsize and petty enterprises in large scale, and many bosses escaping. Therefore, the key point is to make a deep analysis of the internal evolutionary mechanism of private loan and introduce specific solutions to the problems. Minsky’s hypothesis of financial instability offers a convincing explanation to financial crisis. According to the abovementioned theory, the internal cause for private financing weakness lies in transition from Hedge financing to Ponzi financing. To improve the situation, a substantial economic foundation needs to be laid for healthy development of private loan. Moreover, a “macrosupervision” mode by “macrobank” and “macrogovernment” and reform hypothesis of establishing community development banks introduced by Minsky offer significant means for development of private financing.

private loan; hypothesis of financial instability; shadow banking; community development bank