Financial Regulatory Index Construction

The financial industry is the core of modern market economy, the healthydevelopment of financial markets to promote a country’s economic and socialdevelopment to a great extent. This financial crisis make people recognize theimportance of financial supervision again, only measure the financial regulationaccurately we can improve it, but the research about financial regulation alwaysfocus on the qualitative aspects lack of quantify level. All these research can’tmeasure the level of financial regulation accurately, so we are need to come up witha new approach to measure the effect of financial regulation more accurately, that isthe financial regulation index. Because the financial regulation involves manyaspects of the economy, it’s not a simple economic category but a comprehensivereflection of series of factors, so it can’t reflect a country’s financial regulationaccurately. We usually construct "index" as a comprehensive indicator to judge thedegree of something, so we come up with the "financial regulation index".Thefinancial regulation index in this paper not only take into account the three objectivesof financial regulation system, but also the impact of the financial crisis on theconstruction of the index and inspiration,Besides, we selected the indicator system offinancial regulation covering the traditional three big financial sector, i.e. Banking,securities and insurance industry in order to make the index more accurately andmore comprehensive.This paper carried out two types of empirical analysis, the firstone is we compared the financial regulation in45major countries of the global, thesecond one is we use another more accurate regulation index framework to analysisour country’s financial regulation between2002and2010in order to find theachievements and the shortcomings in China. Finally, we came up with6six policysuggestions in order to improve our country’s financial regulatory system.