Research On The Theory And Policy Of Circulation Of Financial Industrial Capital

This thesis focuses on the theory and policy of capital circulation of the financial industry. By investigating the finance development and the capital circulation of financial industry in China, and the relevant research at home and abroad, it systematically reviews and draws lessons from several theories, such as theory of circulation of industrial capital, theory of financial capital and interest-bearing capital, theory of asymmetric information and exchange expense, theory of budget constraints and gap, theory of industrial organization and development of financial industrialization. It has defined the basic category and the basic research perspective of the capital from exchange and benefit chasing, analyzed the forming law and circulation mechanism of the financial industrial capital, further theoretically reviewed its inherent impetus and market restriction mechanism, set up the analysis frame of circulation efficiency of financial industry's capital. Hereby, with the method of history analyze and econometrics, the paper inspects the capital circulation efficiency and the character of financial industry, theoretically explains the reasons for low efficiency, and put forward the related policy measures to improve the benign circulation of the financial industrial capital in China.1. Basic conclusion in the thesis(1) It is the market mechanism that dominates the financial industrialized development, which characterizes the financial development. And the development is supported by the capital element that chases the profit maximum. The modern finance is based on work division and the credit exchanging, chasing profits maximum is the instincts and growth route of financial enterprises, so the financial development of the transition should follow the market economy law, the capital-intensive finance department should become the strong financial industry. Therefore, it is necessary to acknowledge the enterprise attribute and the profit-chasing instinct of the financial institution. The capital factors of financial enterprises go by the name of the financial industrial capital, which is a kind of relatively rare financial resource. The instinct of the capital is to pursue market and profit unlimitedly, which requires the capital to be in motion restlessly. In order to resume the profit-chasing instinct of the capital, the market mechanism must dominate the running of the capital.(2) The forming of financial industrial capital is based on the need of market and the outcome of the continual work division of capital systems, and its quantity objectively has an optimum economic scale. With the gradual progress of the social division, the financial industry's capital separated progressively out from industrial capital and commercial capital, becoming a relatively independent capital system. It closely links to the destiny of industrial capital and commercial capital through credit exchange, forming the profit community. This kind of connection develops with the development of credit system. From the perspective of microcosmic and market, the endogenous formation of financial industrial capital is an inevitable choice to avoid liquidity crisis. From macro- perspective, to maintain the stable growth of the macro-economy, it is necessary to keep a best proportion between financial industrial capital and real industrial capital; otherwise, the real economic department and financial economic department will not develop coordinately, and the economic growth can't develop stably. Studies have shown, without system obstacle and impact in surprise, the optimum scale of financial industry capital will be adjusted and realized through the law of social average profit ability and market mechanism.(3) The ceaseless circulation of financial industrial capital is the concrete embodiment of its vitality and productivity; it can realize not only its social value but also its value appreciation by circulating constantly. Like real industrial capital, the financial industrial capital can realize internal circulation and value appreciation through developing and exchanging the financial product. However, most circulation was finished through the external credit exchange. Once the use right of the financial industrial capital is lent out, it will immediately participate in the real industrial department's capital circulation and create social value, further realizing own value appreciation. Under the open economy condition, there is no boundary among the capital circulation. As long as there is the value-added difference among different markets, it can flow into the market of high from the lower one about capital marginal productivity, accumulating and circulating. This is a universal circulating law of financial industrial capital dominated by the market mechanism. Because of the difference of resource endowment and element marginal productivity among the flow and allocation of the capital in the whole society will be non-balanced, due to the domination of the law.(4) There are inherent impetus mechanism and restriction mechanism in the circulation of financial industrial capital dominated by market mechanism. Its impetus mechanism includes: profit-chasing mechanism, supply and demand mechanism and price mechanism. The profit-chasing mechanism drives the capital to flow from the low-efficiency department to the high-efficiency department, and do the best to evade various risks in circulation. Financial industrial capital participating in circulation of external economy relies on the extensive demand of market to it. The demand will guide the supply of the financial industrial capital. Because the supply of the capital is relatively limited, it will finally restrict its valid demand forming a price mechanism and affecting the circulation of the financial industrial capital. The changes of interest rate, exchange rate and security price, on one hand, are the results of the supply and demand mechanism of the capital; on the other hand, can lead financial enterprise to make investment tactics adjustment, thus changing the market range of the circulation of the capital. In the transaction of financial industrial capital, there are various uncertainties, risks and asymmetrical information, thus forming a kind of inherent restriction to the financial industrial capital circulation. At this moment, in order to avoid the various market risks, guarantee the maximal appreciation of the financial industrial capital, financial enterprises will either make use of the financial agreement mechanism or adopt prudent management.(5) The ultimate goal of the circulation of financial industrial capital is to realize optimum efficiency. In theory, the circulation efficiency of financial industrial capital can be divided into micro production efficiency, middle allocation efficiency and macro function efficiency. Micro production efficiency is used to investigate the proportion of the net profit of financial enterprises brought by a certain amount of financial industrial capital, usually taking the range and speed of value appreciation as the evaluation criterion. Middle allocation efficiency is used to investigate the speed and quality of the deposit-to-investment transform of the financial enterprise through financial industrial capital circulation; Macro function efficiency is used to find out the positive result of economic development through the financial industry capital circulation, usually taking the contribution of the circulation to economic growth. Studies have suggested that financial property system, financial market structure and price mechanism, technological progress and finance innovation, management inside the financial enterprise, social credit environment and order are the important factors to influence circulation efficiency of financial industrial capital. These factors form the analyzing frame of circulation of financial industrial capital.(6) The circulation mechanism of financial industrial capital in China is not smooth and its efficiency is not good. Empirical research has shown that the capital circulation efficiency of every commercial bank in China is not as good as the efficiency of the western commercial bank with more excellent achievement, and the micro production efficiency presents a trend of tremendous drop. Behind this kind of trend, the expansion of market range and the credit scale has not become the important factor of promoting micro efficiency. On the contrary, it caused the huge non-well assets, and accumulated a large number of financial risks. With the strengthening of market-based reform of finance in China, market restriction to financial enterprise appears progressively. The existence of credit rationing and a large number of deposit-gap has confirmed the response of financial enterprises to the market restriction, and has shown the poor circulation of financial industry capital in China and declining middle efficiency. To macro efficiency, it has appeared the downward trend too. But the circulation of the bank credit capital is the important factor to promote China's economic growth all the time. The improvement of bank credit efficiency is favorable to economic steady growth.(7) There are deep historical and realistic reasons to the poor circulation efficiency of financial industrial capital in China. First, the organization structure of the monopolistic financial industry and the artificially-separated market format are the market root of the low efficiency. Second, the financial rent caused by interest control has restrained financial enterprise's ability of obtaining financial rent maximally. Third, the allocation mechanism of financial resource dominated by government ensured the realization of political target, but has sacrificed the market interests of the financial industrial capital. Fourth, the serious shortage of morals and credit in the financial exchange in China has aggravated the intensity of information asymmetry, damaging the circulation efficiency of the capital. Fifth, the emptily-set financial property right of the state-owned bank and the incompact administration inside are the most direct reasons for "X poor efficiency". In addition, the soft budget constraint of bank has weakened the foundation of the steady running of China's financial industry.2. Important viewpoints in the thesis(1) The development of modern finance is not only to serve as the finance medium-transforming the deposit resources to social investment, but with the intensification of financial liberalization and marketlization there is deeper connotation about finance development. Basing on market mechanism, credit exchange and chasing the maximum profit, financial development increasingly demonstrates its relatively independent characteristic. It not only has extensive connection of mutual reciprocity and mutual benefit with real economy, but can break away from the real economy and run independently, and exert a great influence on national economic development. Only if the growth route of industrialization of the modern finance and its development connotation are entirely understood, financial development strategy can prevent the financial industrial capital from agreeing more on the government public goal and damaging its economic efficiency. It also can ensure that the financial industrial capital circulates and increases its value according to market economy law and law of value.(2) It is the essential attribute and inherent requirement of modern financial industry development that market mechanism dominates the allocation of financial resource and the capital circulation of financial industry. In order to conform to the financial industrialization trend, China must introduce the market mechanism into finance, allocate the financial resources mainly relying on the market mechanism, advance the finance industrialization and develop the finance into a financial industry with strong competitive power through the good circulation of financial capital.(3) Chasing market and profit maximum is the inherent instinct of financial industrial capital. With the market opening and lower cost of capital flow, the financial industrial capital will flow into the high-efficiency market from the poor-efficiency market due to the difference of regional resource endowment and production efficiency, thus making it circulate unevenly in the whole society. But this kind of non-balanced circulation accords with requirement of economic efficiency. If the government forces to intervene in it to pursue the regional equilibrium allocation, the economic efficiency of the financial industrial capital will be sacrificed. For this reason, the government should make up the disequilibrium through public monetary system, foster the new point of profit growth as to guide the flow of the financial industrial capital, thus achieving the goal of macro adjustments and controls.(4) Providing present finance has developed into embryonic form of financial industry already, the reasons for obstructed circulation mechanism and low efficiency are complicated and various. The most basic reason is government's long-term dominating and controlling the finance accumulation. The government dominates the allocation of financial resource and its circulating process by controlling the financial property right, interest rate, credit scale and budget support for centralizing and utilizing rare financial capital to meet the national development strategy and its own political goal. It seriously damages the value-appreciation efficiency of financial industrial capital. So, aiming at promoting the benign cycle fundamentally, the government must keep harmonious relations with financial enterprise withdraw from the management of financial enterprises, especially the state-owned financial enterprises, and make the market mechanism dominate the running of financial enterprises and the circulation of financial industrial capital.(5) Financial development has enormous positive externalities, but its risk accumulation and diffusion has strong negative externalities. In the process of industrialization and marketlization of financial development, it is very essential to remain the government mechanism to some degree for reducing the negative externalities. In order to advance the benign cycle of China's financial industrial capital and sustainable development of financial industry, it is in need of the innovation of financial system, the use of advantage of market mechanism and government's mechanism, and setting up the market financial system.3. Main innovation in the thesis(1) Has established the capital analysis frame of financial industry on the basis of exchanging and chasing profit. As to the defect of mistaking financial enterprise's function as intermediary in the long-time financial research, the thesis has introduced the new institutional economics method, from the perspective of exchange and chasing profit, resumed financial enterprise's fund as capital, and set up new analysis frame of financial industrial capital, realized the conversion of studying pattern, broken through the traditional research of fund medium function of financial institution, opened up the new analysis perspective.(2) Has deepened the forming of the financial industrial capital and its circulation mechanism. The thesis has applied the theory of industrial capital circulation of Marxism economics and its interest-bearing capital theory, investigated new form of the circulation of modern financial industry capital, and fully summarized its new route of circulation. In the same time, by introducing the theory of endogenous finance development, this paper has found the inherent forming mechanism of financial industrial capital. And with the theory of exchange expense and information asymmetry, this paper has found out that the validity of the mechanism of market restriction and the mechanism of financial contract.(3) Has set up the new assessment frame of the circulation efficiency of financial industrial capital. This thesis has broken through the traditional study of ascertaining the financial efficiency on the micro base of financial enterprise, expanded it to micro production efficiency, middle allocation efficiency and macro function efficiency, and ascertained the assessment principles, index systems and methods respectively, opened up a new horizon for the research of financial efficiency.(4) Has positively examined the efficiency of every level of financial industrial capital in China. The thesis has used the SCP analysis pattern of the industrial organization theory, to set up the pool data models, and found the leading factor causing micro production efficiency to drop. By using modern econometrics tool it has unveiled the relation between bank development and economic growth, and the relation between the efficiency of the bank credit and economic growth, and confirmed the poor circulation efficiency of China's financial industrial capital from middle and macro perspective.(5) Has pinpointed the ways of promoting the benign cycle of China's financial industrial capital. This paper has put forward the route of changing idea system innovation, relieving finance restriction, and realizing the route of finance development dominated by market. Based on the route, this paper has brought forward the concrete policy measures.4. Policy proposals in the thesis(1) Set up credit system, and construct the harmonious ecological environment of market finance. This includes legislating credit, protecting creditor's interests, raising the cost of lost credit, launching credit education among all citizens, setting up the networking of credit information and common sharing mechanism with compensation.(2) Foster the market bodies, and improve industrial financial organization and its market system. Firstly, support the growth of medium and small financial enterprises, offer them the same national treatment as state-owned finance; meanwhile, foster lots of new medium and small financial institutions, and acknowledge the legitimacy of the informal financial capital, supervise the development of the informal finance. Secondly, accelerate the development of financial market, and advance the financial industrial capital to enter capital market to increase its value.(3) Reform financial property system and administration structure, and foster high-quality financial enterprises. The financial property reform includes: First, foster a number of new financial enterprises of clear property right border. Second, reform the state-owned financial enterprises to have multi-bodies of property right. In order to improve the administration structure of financial enterprise is that financial enterprise should set up a directors committee, a management committee, and supervision committee, thus reflect the mechanism of separating and balancing completely in ownership, power of management, authority to supervise.(4) Advance the marketlization of interest rate, and set up the financial price mechanism dominated by market. This includes: relax the limitation of interest rate of direct financing, form the unified interest rate of the same business on the nationwide, allow the interest rate of the deposit and credit to float properly, Set up an effective exchange rate mechanism mainly determined by the market and the mechanism in which interest rate has contacts with security price, international capital market price.(5) Harden the budget constraint, and construct the self-regulating mechanism of financial enterprises. Firstly, establish the concept of relatively stable finance. Secondly, eliminate the support role of the state-owned bank as soft budget of state-owned enterprise, and harden the budget constraint of state-owned enterprise. Thirdly, reduce the market concentration degree of financial industry through introduce a number of private financial enterprises as to reduce the negative externalities of financial enterprises going bankrupt. Fourthly, set up the mechanism for financial enterprise withdrawing from market. Fifthly, the government should withdraw properly from the direct business activities of financial enterprise.(6) Encourage real enterprise melting in financial enterprise, and establish moldable cooperation between bank and enterprise. First, strengthen the bank's controlling function to enterprises. Second, standardize government's behavior and make the relation between bank and enterprise marketlized. Third, establish the advancing and retreating cooperation relation between bank and enterprise.(7) Explore the world market, and advance the international circulation of China's financial industrial capital. China's financial enterprises should have the open and global awareness, and make full use of the international and domestic financial resources, and open actively up international and domestic markets, to realize the maximum appreciation of financial industrial capital on the basis of maintaining value. At the same time, they should evade international financial risks and reduce its losses.(8) Separate the supervision from government, and set up the complete control system independent of government. According to the risk characteristic of financial industrial organization, China should set up the supervisory system of "four in one", i. e. financial enterprises supervising themselves, market supervising, supervision of trades society and supervision of regulator, finally strengthening the effective supervision to the circulation of financial industrial capital.