A Study On The Perfection Of China's Financial System Based On Financial Disintermediation

Financial disintermediation originated in the United States 1960s from the changes in the macroeconomic environment and the adjustment of monetary policy. In the beginning, financial disintermediation was mainly reflected by the shrinkage of commercial banks deposit and lending business, long-term deposits and short-term loans, and the expansion of direct financing. Today, financial disintermediation has penetrated into every corner of the US financial system, with the development of diversified and multi-level financial markets. As China's economic policy orientation, the gradual improvement of market economic system, and the rapid development of capital market, financial disintermediation appears in China, and has a growing trend, since 1990s. The development of financial disintermediation explored kinds of shortcomings of China's financial system, such as poor commercial banking business types, inactive and low efficient of financial markets and so on. Financial disintermediation also made the corresponding request for the reform of China's financial system. Separate operation, or mixed? What's the objective of China's financial system reform? How to achieve the objective? And all these questions urgently need to be answered.This paper lists financial disintermediation theory, and draw lessons from the evolution and development of USA and Japan's financial system during financial disintermediation. At last, it proposes suggestions meeting China's national reality to promote the further reform of China's financial system, such as financial innovation and business innovation of commercial banks, diversification of financial institutions, and the transition from institution regulation to composite regulation and so on.Also, there are some notes we should pay special attention. Currently complicated international economic environment, linkage effects of economic globalization and the sudden and unpredictable of financial crisis makes China's financial disintermediation long-term and repetitive. In view of the global financial crisis triggered by the U.S. subprime mortgage crisis, China should be more careful to follow the Western model of economic development. Finance innovation model should meet China's reality. Especially in the beginning of disintermediation, we can't repeat the US's mistake by over innovation. Government should pay equal attention to financial markets and institutions. Ensure the liquidity of the market and the banks, at the same time, implement strict regulation to fully unleash the positive effects of financial disintermediation, to ensure the healthy and stable development of China's financial system.