Study Of The Legal System Of Internal Control Of Commercial Banks

Safe operation of commercial banks plays a pivotal role in national economy. Instability in commercial bank industry has enlarged the probability of financial crisis. Therefore, most of western countries have established the supervisory mechanism which combines official supervision, internal control and marketing restriction altogether. Hysteresis nature of official supervision, impacted by economic development and distribution of social resources, has contributed to more emphasis on internal control which is no longer the self-governance but part of regime of supervisory law. Our state legislation has already regulated the internal control standard of commercial banks according to the Basel Committee's request which has played a very important role on the basis of analyzing the reason of internal control. However, many flaws need to be rectified. Thus, to improve the law system of commercial banks' internal control is of great practical significance.On the purpose of improving the legal system of commercial banks' internal control, this paper starts with the analysis on the internal control theory and then analyzes regulations of Basel Committee and other countries such as America and Britain.Thereafter this paper tries to illustrate the defects of the legal systems in China to give some legal suggestions on how to improve its construction.This paper is divided into four parts. Introduction brings forward the topic of this paper starting with the enlightment of financial crisis. Chapter One focuses on the necessity and practical significance of commercial banks' internal control system for China, introducing internal control theoretical background and its development. Chapter Two and Chapter Three concern with the present legal system and practice of internal control of Basel Committee and other countries under the background of financial crisis, searching for references to the construction of our country's legal system of internal control. Chapter Four gives some suggestions on the construction of legal system, including corporation administration structure, official supervision and supporting system, according to the analysis on the defects of present legal system of internal control.