Regulatory Scheme On Financial Innovation In China

Financial engineering theory, economic globalization, information technology, the powers affect the financial industry from different perspectives and reshaping the profile of the western country's financial industry. As the new financial environment changes, the existing regulations is not suitable for development. Adjusting regulatory system to the development of financial innovation is the major means to improve the efficiency of financial markets. Regulatory constraint is the major limitation of financial innovation. In this paper, considering financial innovation bounded to regulatory system, we explore the interaction mechanism between the evolution of financial innovation and financial regulatory system, and based on the practice of sub-loan crisis in the United States we analyze the deficiencies in the regulatory system to financial innovation.We proposed regulatory arrangements in China. The main work of the thesis is:(1)Analyzing the interaction mechanism between financial innovation and financial regulatory system.The reasons for the existence of the financial regulatory system is the existence of market failure, market failure caused by a part of the reason lies in the limitations of financial innovation, regulatory system are adopted to make up for the limitations to avoid market failure.Rules and regulations is an important reason for financial innovation, financial institutions want to avoid regulatory constraints, leading to the regulation null and void, thereby creating a new regulation. The financial innovations and regulatory changes are turn of the cycle.(2) The empirical analysis on sub-loan crisis verified that the financial regulatory system bottlenecks caused market failures and lead to a financial crisis, demonstrated the importance of matching between financial innovation and the regulatory system. Through qualitative analysis, the risk of transmission mechanism and quantitative analysis of sub-loan crisis revealed an important reason for crisis is the shortcomings of the supervision, they did not take full account of systemic risk under the financial innovation environment. Changes in the environment lead to changes in the regulatory system as a response, the United States, the Basle Committee, risk rating agencies have adopted a series of measures.(3)After comparative analysis of the international financial regulatory system of the Western countries, we got the contemporary characteristics of the overall system of Western countries. We established the framework of regulatory system arrangements in the financial innovation environment based on China's actual conditions. Including the recent system, the long-term system, as well as financial derivatives risk management institutional arrangements and detail the thinking and practice results of the CBRC's financial innovation supervision. Subprime Loan crisis revealed the defect of the U.S.dollar as the international currency,we brought out the context of strategies to promote the internationalization of the renminbi from the perspective of financial innovation and regulation including financial capital market reform programs and establishment of financial innovation system and credit system.