Abstract: The evolution of endogenous finance is an institutional changing process supported by the external institutional environment on the macro level, while on the micro level it is a constantly remodeling and expanding process of the contractual structure, and the endogenous finance has a high degree of contractual intensiveness. In essence, China’s private banks also have the general institutional properties of the endogenous financial institutions. Their development is the inevitable choice of the private economic entities faced with the dual constraints of the credit rationing from the demand side and the financial restraint from the supply side, as well as the inevitable result of the dynamic evolution of China’s overall financial system structure. The evolution logic of China’s private banks fundamentally lies in the separation of financial capital and industrial capital, as well as the rational choice of the financial entrepreneurs through cost- earnings weighing under the incentive structure formed by the inside and outside systems and the cost reducing requirement. The Robust and efficient operation of China’s private banking system needs the promotion of a good development of the inside and outside intermediate structures.

Key words: endogenous finance; evolutionary logical; contractual-intensiveness; private banks