| Summary: | Abstract This article examines the government intervention in market governance, that is, why a local government that claims to be a rule maker or market regulator would intervene deeply in transaction disputes between market players. Based on the institutional analysis in the fields of sociology and economics, the author constructs a theoretical framework of risk transformation to study the case of a loan dispute at the Wenzhou Private Lending Service Center. The study shows that there are two aspects in the process of government intervention in transaction disputes: the transformation of economic risk into political risk and the government’s response to risk transformation. The completeness of law, the relationship between government and market players, and the ability of the government to withdraw from society are the three structural factors that affect risk transformation. Facing risk transformation, the greater the potential political risk perceived by the government, the more likely it is to intervene in transaction disputes. This paper provides a new analytical approach for studying the role of government in market transition and the social construction of market institutions.
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