The Choice Of Financial Regulation Mode Under Integration Of Financial Industry

Since the 1980s, there has been a revolutionary and profound change in the field of international finance. Many countries cancelled rigorous rules on financial separate operation and transformed to integrated financial system in succession. Now integration of financial industry has been a worldwide dominant trend. Under the integrated financial system there are a lot of complicated risk factors, so it is necessary to supervise the whole financial system properly with an effective financial regulation mode.As a kind of institutional arrangement, the evolution and development of the financial regulation mode follows certain rules, and is affected by multiple factors. In the world there is no identical and everlasting financial regulation mode. We can see from the practices of various countries that the financial regulation modes have great variety due to the differences in national conditions. So there is no fixed and unified regulation mode that can be copied under integration of financial industry.In recent years, our county's financial pattern has changed a lot with the advance of financial deepening. The cooperation and penetration of banking, securities and insurance have been developing in an all-round way, and the limit of separate operation is being broken through. Furthermore, various financial holding companies are growing steadily. Under dual pressures of domestic and foreign competition, it is the goal of our financial system reformto realize complete integration of financial industry. On the other hand, as far as the financial regulation is concerned, obviously the new financial instruments and institutions with the characters of integration of financial industry can't be supervised effectively under the separate regulation mode. So it is a must in China that the present financial regulation mode be adjusted or reformed suitably. With regard to the choice of future financial regulation mode, we should establish and strengthen financial regulation authorities and systems concerned according to our specific national condition and developmental stages of integration of financial industry, using adequately foreign experience for reference. The financial regulation should gradually transit from institutional regulation to functional regulation, and from diverse regulation to single regulation by the principles of functional regulation, regulation information sharing and appointing regulation coordinator.This paper includes four parts. The first part employs the theory of new institutional economics to analyze the evolution of financial regulation modes and the factors affecting the evolution in western countries. The second part discusses the most representative financial regulation modes under integration of financial industry in the world, comparing their advantages and disadvantages. After theoretic analysis and international comparison of financial regulation modes, what follows is about domestic scene. The third part illustrates recent development and future trend of integration of financial industry in China, and then explains the necessity of adjusting and reforming the present financial regulation mode by analysis of the impact and challenge of integration of financial industry on separate regulation mode. The last part puts forward that the reform and development of the financial regulation mode follow certain principles and three practical steps in accordance with the course of integration of financial industry in China.