Evolutionary Study On Financial Product Innovation Of China's Commercial Bank

Financial product innovation is an important project for all financial institutions both in research and in practice. Since the entry into new century, numerous problems and challenges have been arising in financial product innovation for domestic and overseas financial institutions. Furthermore, there seems to be causal relation between financial product innovation and several financial crises, even including the international financial crisis that generated in the United States. Since 1990s, theory and model study in financial innovation has become prosperous. However, systematic study on the process of financial product innovation is rare, let alone the study on systematic principles of financial product innovation. This dissertation aims to provide a new theory platform for China's commercial banks to enhance product innovation and solve diversified problems by taking advantage of evolutionary economics, a newly-rising branch of science.The dissertation studies financial product in an integrated framework of system evolution and inspects financial product innovation in the respective of self-organization theory, which obviously differs from the practice of precedent researchers whose major focus were solely put on financial product innovation itself. This dissertation holds that the phenomena of financial product innovation are not unilateral or separated, but involves internal evolutionary logic. Based on the above, the key innovation and breakthrough of this dissertation lies in the observation and analysis on process as well as systematic evolutionary principles for financial product innovation in the respective of evolution through the acknowledge of innovation characteristics and principles in an interactive relationship between financial product innovation and customers.The dissertation establishes theory framework for China's commercial bank in financial product innovation by starting from the setting-up of integrated framework for financial product innovation. Firstly, it elaborates the cause for financial product innovation in the respective of evolutionary theory. Secondly, it analyses ordinary evolutionary process of financial product innovation by emphasizing on the characteristics of self-organization and reveals that the success of innovation is influenced by knowledge critical point of innovator, enthusiasm of customers and the communication between them. Once customer's demand on innovation slows down, evolutionary process and speed of product innovation will be retarded greatly. Furthermore, it conducts an analysis on the phenomenon that product innovation process can be accelerated by random disturbance and non-liner mechanism and leap phenomenon. Thirdly, it makes progress in establishing and analyzing integrated evolutionary model of product innovation system. Innovation can be processed in two directions, one is gradual innovation generated by path dependence effect, the other is non-liner mutation innovation generated by force fluctuation effect, which will lead to the birth of brand-new product. Besides, this dissertation discovers the fact that evolutionary process of commercial bank's product innovation bears lifecycle characteristics, although its evolutionary condition is influenced by various factors of growth speed, such as growth speed coefficient under the influence of internal and external condition. Based on the analysis, it comes to its theoretical viewpoint which will be beneficial for commercial bank's financial product innovation.Based on the analysis on evolutionary game model, the dissertation makes a further progress in analyzing the communication process, evolutionary principles of rules that reflect commercial bank's product innovation. Furthermore, it probes into evolutionary stability strategy that generated by product competition rules in banks that coordinates with evolutionary game model. Under the condition of uncertainty and bounded rational space, only effective internal rules & regulations can ensure the formation of internal evolutionary mechanism.Finally, the dissertation conducts in depth analysis on the characteristics and problems of China's commercial banks in the respective of evolution by combining the development and characteristics of overseas commercial banks in the area of financial product innovation. It also suggests direction, steps and strategy for China's commercial financial product innovation and provides advice on how to enhance rules& regulations establishment.