Abstract: As the crucial financing channel for small and medium-sized enterprise in China, the informal finance plays an important role in the development of Chinese economy. In this paper, the theoretical influencing mechanism running from informal finance to Chinese main macroeconomic variables is explored. On this basis, the VAR model is used to empirically investigate the impacts of informal finance on these macroeconomic variables by choosing China private finance index as the agent of informal finance. The results show that, in theory, the informal finance can directly and indirectly through the monetary policy affect economic growth and inflation; the interaction between the informal finance and the monetary policy depends on the linkages among macroeconomic variables or relies on the transmission of formal finance. From the perspective of empirical analysis, the informal finance has a significant effect on the economical growth, and the development of informal finance first positively affect economic growth, and then turns to a negative effect on it. The informal finance can also significantly affect inflation, and the rise of private finance rate will exacerbate inflation. However, because the economic growth and inflation cannot significantly affect the monetary policy and the informal finance does not have a significant interaction with the formal finance, there is not an evident relationship between the informal finance and the monetary policy, which indicates that informal finance can't indirectly affect economic growth and inflation through monetary policy. These results provide a deeper insight into the relationships between the informal finance and macroeconomic variables, which will be benefit to make corresponding economic policy and control the risk of the informal finance.

Key words: informal finance, macro economy, small and medium-sized enterprise, Wenzhou index