On The Legal Governance Of Financial Regulatory Arbitrage In China

Various forms of regulatory arbitrage practices that avoid supervision are present in China’s financial field,which not only weakens the effectiveness of supervision,but also hits the authority of legislation,leading to chaos in the financial order,accumulating financial risk,and even causing financial crisis.Regulatory arbitrage is not a problem involving a certain market player or business.Therefore,this paper proposes suggestions for the legal governance of regulatory arbitrage in China’s financial sector from the perspective of overall situation.The first chapter is an overview of regulatory arbitrage,in which the definition of regulatory arbitrage is made clear: regulatory arbitrage refers to the behavior avoiding supervision by taking advantage of differences or loopholes in supervision in order to reduce the cost of being regulated.It is essentially the behavior of market players to draw on advantages and avoid disadvantages when they are supervised.After analyzing its legal nature,it is found that there is a correlation between regulatory arbitrage and the evasion of law.Regulatory arbitrage is not equivalent to illegal act and is complex in legal force.At thesame time,typical models of regulatory arbitrage in China are listed for classifying types.The second chapter analyzes the causes of regulatory arbitrage.The direct causes can be divided into two aspects: internal driving and external environment.Although regulatory arbitrage has a certain positive effect,it always brings serious negative effects.In general,the disadvantages outweigh the advantages,so the problem should be managed in a timely manner.The third chapter analyzes the current situation of legal governance.It is found that although China’s regulatory authorities achieved certain results by improving the regulatory framework,updating the regulatory system,and directly cracking down on regulatory arbitrage,there are still many limitations.In the fourth chapter,institutional countermeasures for legal governance are proposed.In terms of internal driving,it is necessary to reduce information asymmetry,optimize the construction of market credit system,rely on "credit constraint" to reverse the inertia of regulatory arbitrage,and give full play to the function of market constraints.Regarding external environment,the functional supervision should be strengthened,and the same supervision standards should be apply to the same kind of business;penetrating supervision can be implemented so as to see through the evasion means to perceive the economic essence of the business;in the meantime,principle-oriented supervision should be promoted,the complementary advantages of rules-oriented and principle-oriented supervision should be reinforced,and the principle of proportionality can be introduced to the field with excessive discretion;under the current separated supervisionsystem,we should further improve the supervision coordination mechanism;propel the post-legislative evaluation mechanism of financial supervision systems;besides,the key is to cultivate a healthy financial culture,improve the whole financial ecological environment,so as to effectively manage regulatory arbitrage from the source.