A Study On Effective Regulation Of Chinese Commercial Banks’ Trade Finance Financial Institution Business

There is great significance of trade finance business’ s support on real economy. As an important part of trade finance business, various new products of trade finance financial institution business have been introduced in recent years. At the same time, trade finance financial institution business related regulatory policies have also been implemented frequently. Former studies mainly focus on the procedure and impact of trade finance financial institution business, however, studies on regulation of trade finance financial institution business is rare. This thesis, taking regulation effectiveness theory as researching frame, from an neutral and object view of point, utilizing normative research and empirical research method, makes research on effective regulation of Chinese commercial banks’ trade finance financial institution business.This thesis firstly introduces current situation of trade finance financial institution business regulation, pointing out that commercial banks making credit assets off-balance sheet and participating in corporate arbitrage by trade finance financial institution business is the focus of regulation. CBRC, MOF, PBOC and SAFE are main regulatory institutions.On the basis of current situation analysis, the problem is raised, which discuss and proves the regulatory disorder in trade finance financial institution business regulation. The empirical study with VARX model demonstrates that disorder exists in off-balance sheet trade finance financial institution business regulation, and that arbitrage trade finance financial institution business regulation is generally disordered. With the problem, this thesis analyses the impact and reason of regulation disorder, stating that regulation disorder cause negative influence to financial stability and efficiency, and that regulation disorder arise from group interests and information asymmetry of regulatory institutions.Afterwards, this thesis discusses the necessity and feasibility of effective regulation of trade finance financial institution business. As for necessity, effective regulation serves solid development of trade finance financial institution business and real economy. As for feasibility, shadow bank and cross-border arbitrage attracts great attention, China’s accounting rules and capital regulation almost acting on international convention offer condition for effective regulation.Then international reference is introduced, stating that Europe’s regulation of risk participation takes capital adequacy as framework and financial reports disclosure accuracy regulation as foundation, and that Hong Kong’s regulation of Hong Kong bank participating mainland China trade finance financial institution business is effective for Hong Kong but for mainland China.The last part of this thesis is policy suggestion. In strategic direction, deepening macro-and-micro prudential regulation and intensifying restriction and supervision of regulatory institutions are needed. In implementation path, the regulation should be completely in line with international prudential regulation system, the information asymmetry should be reduced, and cooperation between different regulatory institutions, foreign regulatory institutions as well as public opinion supervision should be intensified. In specific measures, foreign exchange business should be regulated with the same standard as RMB business, the State Council should coordinate the conflicts between CBRC and MOF as well as the conflicts between PBOC and SAFE, and so on.This thesis’ s contribution and innovation focus on two parts:The first part is the development of regulation effectiveness theory. Firstly, this thesis points out that regulatory institutions’ lack of restriction and independence can be the reason of regulation disorder. Different form western countries, China’s commercial banking system is highly nationalized, thus the common interests of regulatory institutions and commercial banks lead to regulatory institutions’ lack of independence. Secondly, information asymmetry can be reason for regulation disorder; current studies hold the opinion that information asymmetry of depositor to banks causes financial instability. Thirdly, this thesis extended group interest theory, pointing out that different regulatory institutions share different group interests, current studies take regulatory institutions as a whole, that is, government in general. The second part is the innovation to studies on effective regulation of Chinese commercial banks’ trade finance financial institution business. Firstly, this thesis proves that there is universal disorder among trade finance financial institution business regulation. Secondly, this thesis points out that regulation disorder arises from group interests and information asymmetry of regulatory institutions, on the basis of which this thesis suggests that public opinion supervision should be intensified and that the State Council should coordinate the conflicts between CBRC and MOF as well as the conflicts between PBOC and SAFE. Thirdly, in the feasibility analysis, this thesis notices China’s accounting rules and capital regulation act on international convention to great extent offer condition for effective regulation. Fourthly, this thesis studies on international reference, based on the discovery that Hong Kong’s regulation of Hong Kong bank participating mainland China trade finance financial institution business is effective for Hong Kong but for mainland China, this thesis suggests that the corporation between mainland regulatory institutions and Hong Kong Monetary Authority should be strengthened.