Theoretical Analysis Of Financial Regulation And Institutional Innovation

The financial sector piays a pivotal role in a modern economic system. Many governments have attached special emphasis on financial supervision and regulation. Therefore, the supervisory institution has been an important part of modern financial system. It is frequently focused on the issue of supervisory theories and practical exploration both in academic and financial fields. With the rapid development of economic and financial globalization, great changes have happened in current international finance, challenging the traditional institution of financial supervision and hence giving an impetus to ifs innovation and development. Upon the threshold of WTO, how to establish and perfect an effective supervisory institution of finance in China so as to adapt to the opening economy and international customs and principles, is an inevitable issue of great importance with wide concerns attached. Accordingly, an ardent concern on this hot topic is shown in this thesis, which mainly analyses the theoretical foundation and up-to-date institutional innovation of financial supervision. The thesis consists of four parts. In the first chapter, the objectives and main contents of financial supervision are briefly stated. The second chapter is a focus of this thesis, covering a comprehensive analysis of financial supervisory theories especially from the viewpoints of the New Institutional Economics. In addition, an analysis of supervisory costs and the application of a game model are also included in this chapter. The third chapter is another emphasis of the thesis. The incentive mechanism and the change in supervisory philosophy are expounded. The new thoughts, new methods and new perspectives are extremely important and worth concerning not only in innovating financial theories, but also in promoting financial practice. The last chapter discusses a couple of relevant issues of financial supervision in China derived from the impacts of the newly changed international environment. As the reform and opening-up of the financial industry should be in line with the regulatory capacity of the authorities in China, the principle of segregation of financial services and regulation has to be followed at present. The integration of the global economy calls for the establishment of a new order of financial stability. Faced with the new environment of the international financial markets, China should meet the challenge of financial globalization by accelerating the pace of financial reform and improving its competitiveness. Some preliminary judgment and comments concerned are also presented.