Escaping from Underground: Private Moneylenders in Chinese Courts

Speaker: Leo You Li, JSD Candidate at Stanford Law School

Nuancing the conventional wisdom that extralegal economic activities tend to “marginalize law” and bypass formal legal systems, we present one of the first empirical studies showing how Chinese unlicensed private moneylenders heavily use courts for debt collection. The study combines an original dataset of 66,843 court decisions in Shanghai from 2014 to 2019 with in-depth interviews with judges and lawyers. We find many private moneylenders abuse litigation to collect extralegal debts, placing judges in a trilemma between contract enforcement, financial order, and vulnerability protection. Compared with occasional lenders, moneylenders not only enjoy more legal services and litigation experience but also benefit more from these resources. Debtors facing moneylenders, however, suffer from severer hurdles of access to justice, especially lacking professional legal help that could otherwise change case outcomes. Conducting case studies on 374 lawsuits brought by three different types of moneylenders, we uncover the tactics they use in courts to evade financial regulation and the judicial approaches to balance conflicting interests. The study highlights the transformation of extralegal activities from marginalizing law to abusive litigation and reflects the role of courts in coping with such a transformation in both China and beyond.

About the Workshops

The SCCEI Young Researcher Workshops are a bi-weekly series of presentations from scholars around campus who are working on issues related to China’s economy and institutions. The aim of the series is to bring together young scholars by providing a platform to present new research, get feedback, exchange ideas, and make connections. Each session features a single presenter who may present a new research plan, share results from preliminary data analyses, or do a trial run of a job talk or conference presentation. The Workshop Series is an opportunity to give and receive feedback on existing research, get to know other researchers around campus who are working on or in China, and be a testing ground for new ideas, data, and presentations.

After this workshop, workshops will resume every other Thursday from 1 - 2 pm. Afternoon refreshments will be provided! 

Visit the Young Researcher Workshops webpage for more information on the content and format of the series and to learn how to sign up to present.