Research On The Regulation Reform Of Chinese Development Bank

As an important department of modern financial system, the development banks actas a financial instrument for the government to regulate the economy. The actual marketmore or less has the ‘market failure’ and ‘market defect’, in which bottleneck areas, theinvestment and financing have the characteristics of public goods or sub-public goods.These bottleneck areas can’t be resolved by the market spontaneous adjust mechanism.Generally, the governments invest to build the market subject. Meanwhile, depending onthe national credit, they raise and guide the social capital to provide the medium-andlong-term financing services, in order to achieve the specific policy goals of government,and ensure the sustainable development of market subject. The development banks havethe policy characteristics on the financing function, and commercial characteristics on thebusiness operation, whose essential character is the compatibility of policy andcommerce. Policy is the base of exist to the development bank. Meanwhile commerce isthe operating guarantee, both of which are necessary.The development banks have only one hundred years’ history, which appeared as anindependent financial form abroad. However, it is only eighteen years till today that thedevelopment banks come into being as an initial form of policy banks. And world-wide,development banks have experienced a continuous exploration and reform. Developedcountries effectively promoted the development banks and Policy-based financingfunctions through establishing and improving the government regulation reform ofdevelopment. It was on the background of market economic reform, that China’sdevelopment banks gradually evolved from initial policy bank, which combined withFiscal Investment and financing, to the real development. Due to the lag of financialreform and constraints of basic realities of country, the regulation of China’sdevelopment bank still has many problems, which blocked the effective implementationof Policy-based financing function, furthermore, affected the market economic reformand the whole reform process of financial system.On the background of China’s development bank transition, excluding the debateabout the rationality of financial system, this dissertation attempts to establish the base of the theory for the development bank regulation, which takes the financial regulationpromoting financial reform as the starting point, uses the theories and methods of WestRegulating Economics, New Institutional Economics, Information Economics, andresearch achievements of financial system evolution in China’s economic transition. Wegrasp a core proposition-essential characteristic, analyze the specialty of regulationsupply-demand, regulation goals, regulation policy systems of development bank, andpropose the point of multi-regulation goals for coordination and unification. Moreover,aiming at the present situation of China’s development banks, combining with the foreignexperiences, the strategy and advices are pointed out.First, based on the current literatures, the relevant theories and perspectives aboutdevelopment bank and its regulations home and abroad are investigated. We attempt toclarify the policy-based finance and commercial finance, development finance andpolicy-based finance in basic conception. Through the connection between developmentbank regulation and China financial system evolution, as well as the present transition ofdevelopment bank home and abroad, the research foundation was established.Second, starting with the analysis to the development bank’s essential characteristic,we construct an analytical framework of supply-demand to the development bankregulation. Meanwhile, the government utility function of finance regulation is used, inorder to emphatically analyze the regulation supply-demand which affected by thegovernment utility preference, and point out the regulation goals of coordination andunification among the indirect rent, direct rent and finance security. Furthermore, throughthe analysis to the principal-agent of multi-regulation goals, the policy-based system ofdevelopment bank regulation was constructed.Third, on the background of China finance regulation evolution and developmentreform, the analysis and estimation to the validity of development bank regulation systemare performed. Based on the theory and policy system of development bank regulation,we also investigate the evolution process and the existing problem of China developmentbank regulation system, and reveal the internal contradiction and system defects ofdevelopment bank under the system of Chinese market economic.Fourth, we choose some typical countries under different market economic form,and compare the operation models and regulation system of the development banks in each country. Through the analysis of typical cases in Germany and USA, we alsosummarize the experiences of foreign development bank regulation, aiming to proposethe useful advices for the reform of China development bank regulation.Finally, according to the problem of China development regulation, and combiningwith the basic national conditions of market economy reforms of socialism with Chinesecharacteristics, using the advanced experiences of foreign development bank regulationfor reference, this study propose the strategy and advices on the reform of Chinadevelopment bank regulation respectively, from the aspects of improving the legalsystem, perfecting the organization system, promoting the transition of ChinaDevelopment Bank etc.In summary, through constructing the theoretical basis of development bankregulation, and analyzing the regulation of China development banks, this dissertationhas a consideration that the development bank appeared in form of commercial bank,accord with the essential characteristic of compatibility between policy-base andcommerce-base. It is only through establishing the theoretical basis and regulation policysystem according to the essential characteristics, that the development banks could beable to exert its policy-based financing function. And as the essential approach,development banks should realize the coordination and unification of multi-regulationgoals and multi-regulation agencies.