The Development Of Financial Innovation And The New Way Of Financial Supervision

After the financial crisis in 2007, the high risk brought by financial innovation has aroused widespread concern and thinking again. The measures to curb financial innovation in various countries have become increasingly severe. However, under the background of the supply-side reform proposed by the Chinese government, the reform of the financial capital elements of the supply root is imperative. Therefore, how to curb the risk of innovation in financial institutions effectively, while encouraging innovation in favor of financial supply side of the reform of compliance, become an important issue to be solved.Since the 1950s, financial innovation and financial supervision have gradually formed mutual promotion and mutual restraint relationship, and showing a spiral upward trend. Because the dialectical dependency between financial supervision and financial innovation is difficult to measure and analyze with quantitative model, the mainstream research method used in the related research is still the game analysis method firstly. This paper also follows this approach and attempts to find the best way to encourage compliance innovation within the framework of game analysis.Based on this, this paper first analyzes the game relationship between the financial institutions and the supervisors in the complete information state. Through the construction of the static game model, this paper studies the strategy selection, the equilibrium strategy and how the supervisors design the best regulatory strategy to encourage the innovation of compliance under different conditions. Then, it further explores the dynamic game relationship between the financial institutions and the regulators under the bounded rational conditions, and analyzes the different effects of the penalties and incentives imposed by the regulators on the financial innovation on the long-term game equilibrium. Then, by constructing the symmetric evolutionary game model under the assumption that the financial regulator adopts the "active supervision" of innovation, it analyzes how the financial institutions with limited rationality can achieve long-term equilibrium between the various strategies and the different expected returns,and to further verify the financial regulators on the implementation of compliance innovation "incentive measures" than the implementation of illegal innovation "punitive measures" is more conducive to "innovation and supervision" between the virtuous cycle of friendship, and thus promote the financial market sustained, healthy and stable development. Finally, on the basis of the conclusion of the study, combined with the present situation of the development of financial market in China, the effective supervision measures was put forward to encourage the reform of compliance and the reform of financial-supply side.