The Research On Dis-equilibrium Development Of China Finance

Finance normally develops with dis-equilibrium, further more, the dis-equilibrium and instability are becoming more and more progressively. The dis-equilibrium development of monetary system, financial organization, financial market, financial price, financial instruments, regional finance, finance openness and the excessively dis-equilibrium of finance system would have influences on the stability of the financial structure as well as reducing the efficiency of financial resources utilization. Dis-equilibrium financial market would lead to market distortion. It also weaken the market functions and is unfavorable for sustainable development of finance. The dis-equilibrium development of finance and external environment, finance and economy, finance and society, finance and other industries, all these contribute to disorder of financial functions.When finance develops lag behind the economy, it probably cannot fulfill its function in serving the society. On the other hand, the fictitious composition of finance would be accumulated and enlarged progressively and end up with evaporation of financial foam if finance over-developed in terms of economy reality. In this text, the author explores the principle of dis-equilibrium development of finance by describing the obit of circulation from non-equilibrium to equilibrium and then to new non-equilibrium in order to promote sustainable dynamic development of China finance.The research on dis-equilibrium development of China finance is base on financial dis-equilibrium development theory. The conclusion is "Excessive dis-equilibrium is unfavorable but appropriate dis-equilibrium situation would benefit economic development. Excessive dis-equilibrium development of finance should be shifted to approach Pareto optimality. The author raises policy suggestions base on the analysis of problems occur in China finance evolution. The author initial applies dis-equilibrium development theory to finance research. In practice, it will contribute to build "concordance", "efficiency" finance as well as economic and social development. The paper is arranged as follow: In introduction, chapter 1, chapter 2 and chapter 3, the author summarizes financial dis-equilibrium development theory, analyzes the logical relationship between balance and dis-equilibrium situations. In fact, equilibrium only exists occasionally, temporarily, transiently. This optimal situation mainly appears in the micro level and in particular markets which also would shift to dis-equilibrium situation quickly with external force. In other words, dis-equilibrium state is much more wide in existence, objective, inevitable, essential than balance state.In these sections, the author also traces the dis-equilibrium state of finance and concludes that it is an inherent feature of finance. Qualitative analysis is conducted on financial equilibrium state, dis-equilibrium state and appropriate dis-equilibrium state. Under the circumstances of China historical background of building the harmonious society, the research meets the demand both from theory and practice.In chapter 4, chapter 5 and chapter 6, base on theoretical analysis, the author further investigates dis-equilibrium development of institutional framework, financial market and financial system in China. We find that dis-equilibrium between western and eastern regions, dis-equilibrium between urban and rural areas exist in China institutional framework, financial market and monetary system. By investigating of the profound facts behind the phenomena, the characteristic and principle on dis-equilibrium development, the author raises policy suggestions in chapters afterwards.Chapter 7 focuses on the evaluation of the effect of financial dis-equilibrium development. As a significant resource that affects economics and society operation, finance has influence on economy, society, politic, etc. in those which can be positive or negative. What would be the influence and the extent of the influence is still a topic under discussion. The analysis in this part includes economic effect, effect on finance itself, external effect and general effect of dis-equilibrium financial development.In chapter 8 the author arise policy suggestions on dis-equilibrium financial development strategy of China.The conclusion can be summarized as: dis-equilibrium financial development is the reality in China currently; Dis-equilibrium financial development embodies in two levels: appropriate state and excessive state. The former would benefit financial development but the later would result in unsustainable financial development. In addition, dis-equilibrium financial development can be observed as formal or substantial. As to these two formalities, we should pay more attention to substantial one. In China, dis-equilibrium financial development lies in such aspects as institutional framework, market system, financial asset price, financial tools. Some of these aspects have hampered the harmonious development of society and beyond the normal range required by sustainable financial development. China dis-equilibrium financial development attributes to geographical difference, government restriction ( price control and quantity control) and dis-equilibrium development incentive.The issue becomes complicated when it involves both market mechanism and government interference. Government interference can correct dis-equilibrium development but it also can be deteriorative under some circumstances. The role of government should be set appropriately and function properly which are essential for financial equilibrium. Countermeasures should be taken to deal with the present dis-equilibrium financial development reality in China. On one hand, we should maximize the benefit of developed cities and regions base on"growth pole"theory and"central cities"principle. On the other hand, market mechanism supplemented by government rational interference would promote harmonious, balanced, efficient and sustainable development.The contributions of this paper are as follow: (1) Concept definition. First of all, base upon traditional equilibrium and balanced concept, the author asserts the confusion and updates the definition of dis-equilibrium development. Secondly, it gives insight understanding of concept of"equilibrium"and"dis-equilibrium". The author argued that"dis-equilibrium"state is inevitable, substantial and normal situation in financial evolution process. What we call"equilibrium"is the ideal status or an approach simplifying the market in specific study.(2)Contribution in theory application. The author initial applies dis-equilibrium theory to development finance research. It enriches the literature in this field and undoubtly it also widens the range of development finance research. (3)The third contribution is the definition of formal dis-equilibrium and substantial dis-equilibrium. When we study financial system, we should take quantity, price, economic environment and resources environment into account in order to decern the situation of substantial dis-equilibrium. Our target is to describe it objectively neither under-evaluation nor over-evaluation. In the course of studying finance development, we should figure out the key facts affecting dis-equilibrium to end up with accurate judgment which would be helpful to find the principles of dis-equilibrium development.(4) The forth contribution is the clarifying of dis-equilibrium financial development reality of China. China dis-equilibrium financial development can be classified into two categories: firstly, dis-equilibrium is inevitable, normal state in the evolution of market which is a kind of Varna equilibrium. Secondly, financial dis-equilibrium development becomes more complex when concerning the interaction of market mechanism and government interference. Government interference is a external force which would affect market positively or negatively. So government role should be set properly and the interference should be operated effectively. It is the theoretical premise for government interference on financial dis-equilibrium development.(5) The fifth contribution is the establishment of dis-equilibrium evaluation criterion. It would provide a standard approach to evaluate dis-equilibrium development.