Research On The Financial Supervision Mode Of Local Government In China

Under the restraint of political system and executive management system of China, the sole system decentralization pattern decided the local authority was in the subordinate and the supplement status throughout financial supervising and managing. In the view of local government supervising and managing financial issues, the higher marketability degree upgrades, the bigger quantity and types of financial organization exist, the more content of local authority supervising and managing is included, the bigger of supervising and managing responsibility should be performed.Many aspects of main obstacles are faced by local government when performing effective regulatory:the absence of legal ground and policy ground for local government to perform financial regulation results in low regulation hierarchy, thus no clear regulatory subject and overlapping regulatory functions, and the financial regulation is not systematic and practicable; the lag of regulation institution results in no clear regulatory target; regulatory content, measures and regulatory targets does not match to each other; regulatory effect is not satisfactory.Based on the practice of local government financial regulation around the world, financial supervision system can be divided into three types, which include "Two-level and diversity subject", "One-level and diversity subject" and "One-level and one subject". United States is representative for the first type; France, Germany and India belongs to the second type, United Kingdom is a typical sample of the third type. Most countries around the world are belongs to the third type. Our country can be considered belongs to the second type, which is "One-level and diversity subject". Generally speaking, local government in United States has strongest supervisory power and responsibility; local governments in Germany and Japan have limited supervisory powers and responsibilities on different levels. The practice of United States provides useful references for us because its local government has the widest range of financial regulation, and the rules in financial regulation is regarded as the most complicated system in the world.The pattern of local government financial supervision in China must be established on the logical formwork, which contains the discovery of financial risk, the control of financial risk and the handling of financial risk. As a big country with a vast territory, a big population and a complexity economic circumstance, according to the national characteristic of China, a financial supervision system should be established, which is explained as "two-level and multivariate, combination of centralization and decentralization, standards harmonization; regulation in turns, recognizing of the result mutually and undertakes the corresponding responsibility respectively That is, there are only the central government and provincial-level governments who have financial regulatory powers and responsibilities. The supervising and managing content, the concrete target in different provinces should be unified to prevent the occurrence of local governments do not have regulatory power in the reasons of financial resources might be cut off and "scrap Kung Fu". it is necessary to establish the regulation evaluation system according to the standard for central and local government, and the results of evaluation system should be recognized mutually. In accordance with the different models of content and range in financial regulatory, and comply with the principle of "who approved and who regulatory", central government is responsible for original regulatory range. At the same time, the regulatory range of central government should be expanded, and national audit office of the People’s Republic of China represents central government to exercise regulatory responsibility, specifically to regulate local government debt situation of local government. Then the system of central government regulatory agent becomes as "One Central Bank. One Department, and Three Associations local regulation sector specifically regulate small loan company, local commercial banks, finance leases institutions, pawn institutions, financing guarantees company and various private equity funds.According to the facts that provincial governments have already established Financial Service Office or Finance Bureau, local financial regulatory responsibilities can be placed in provincial financial (services) office, municipal-level sector is authorized by provincial office’s agency. Construct a sector of Financial Supervising and Managing Agency under the financial (services) office to unified exercise of local financial supervision authority. Eventually, the big pattern of national finance supervising and managing is established which is characterized as "’longitudinally and crosswise, the clear subject and the division of labor, supervising and managing accordingly and efficiently handling"The objectives of financial supervision should be focus on "monitoring risk", "supporting innovation" and "maintaining stability". The indicators need to reflect the intentions both "supervise risk" and "control risk". Index system of financial regulation can be divided into three first-level indicator categories, eight second-level indicators categories, and 26 independent third-level indicators, which take into consideration of the regulatory objectives and obtainment of data. The first-level indicators contain "risk discover", "risk control", and "effect test"; the second-level indicators which directed by first-level indicators contain five objectivity indicators, including "stability indicators", "security indicators", "precaution indicators", "disposal capacity indicators" and "disposal effectiveness indicators", and three subjectivity indicators which used to evaluate risk processing effect are also established.If only considering the local financial supervision system from the angle of financial risk warning, part sensitive indexes and other relative indexes in this system can be used to monitor local financial risk by a multinomial discrete choice model. The data of H province in a period of 20 years is used to certify the significance of risk warning signals by the empirical model. This model cannot reflect comprehensive situation of local government financial regulation, however it is suitable to summary the regular pattern and trend of local financial risk for monitoring and managing local financial risks from outside.According to China’s reality, it should be consummated the laws and regulations on financial supervision in local government as soon as possible. According to the specificity of local governments supervision, "national audit" should be increased, and make financial office" become main subject of financial regulatory following original regulatory pattern as soon as possible, and make "1131" regulation pattern---"One Central Bank, One Department, Three associations and One Office" as the rule of financial regulatory which has "two-level and multivariate, combination of centralization and decentralization, standards harmonization; monitors in turns, recognizes the result mutually and undertakes the corresponding responsibility respectively". According to the basic requirements of "’prior discovery, during control, subsequent relief, the operation mechanism of local government financial regulatory system and operation mechanism should be constructed as soon as possible. And an unified national indicators should be established as soon as possible in accordance with the goal, which can be expressed as "detect financial risk early, control and manage financial risk effectively", and the evaluation should not only combine the ability of discovery finance risk and disposal finance risk, but also combine the ability of disposal financial risks, enhance the economic stability and improve social satisfaction.