Study On The Financial Innovation Of China Merchants Bank (CMB)

Innovation is one subject of financial development and it is critical for the current financial situations to accelerate the financial innovation progress and solve the problems and the restrictions. At the end of year 2006, the transition period of China's joining WTO will be over, the competitions of domestic financial markets must be strong. Under such circumstances, it is important to study the financial innovation for the developments of China commercial banks.In this dissertation, several key issues in the financial innovation process of China Merchants Bank (CMB) are discussed on the basis of financial innovation theories after a review of financial innovations in China commercial banks. The aim of this paper is to give some references to the reformations of CMB and other medium and small banks. Meanwhile, the results in this paper can be used to give some directions to the researchers in financial fields.The background of this study is discussed first and then the worldwide financial innovations are reviewed. In the following, the business conditions of CMB are studied and the advantages and challenges of CMB are pointed out. Meanwhile, the conditions, motivations and restrictions of financial innovations of CMB are analyzed. Finally, the financial innovation principles and strategies are discussed. The results in this study show that CMB has advantages in innovation capability, management level, and profit ability. However, CMB is also challenged by the opening of financial market and the large scale financing of commercial banks. The financial innovations of CMB are very active motivated by the joint with world finance, realization of continual development, prevention of financial risks and challenges of joining WTO. At the same time, the financial innovations in CMB are restricted by concepts, regulations, internal management and techniques. All these restrictions lead to several problems, for example, the innovation is lack of originality and the transition speed to the market is slow. To solve the afore-mentioned problems, the principles that the financial innovation should be guided by market, technology and safety are presented. Meanwhile, several financial innovation strategies such as the endeavors of multi-business are discussed.