Research On Safety Management Of Chinese Modern Non-governmental Bank(1911-1937)

Finance is a dispensable part of economic society. Since bank is the core of the whole finance, it is the main requirement for recent economic financial development to establish reasonable and proper banking system. In order to build multi-level banking system, improve social condition of financial service and increase the entire operating efficiency of national economy, our country has begun to construct non-governmental banking system. Furthermore, such banks like Shenzhen Qianhai, Wenzhou Minshang Tianjin Jincheng have been in working. Safety is essential to non-governmental banks and is the basis and guarantee of all business. It not only needs to learn foreign successful experience, but also should seek to learn lessons from Chinese historical development in itself for the safe managing pattern and selecting developing methods of non-governmental banks. Through collecting and systemizing large amount of historical material and combining with the historical development, this thesis exerts a research on the safe management of modern Chinese privately-owned banks under the help of financial theories. It aims to comprehensively elaborate the safety management system of non-governmental bank from 1911 to 1937, thus to delete historical truth and developing trend. Consequently, it helps to extract valuable methods on the safety management and stable development of non-governmental banks.Modern non-governmental banks have gained excellent achievements on safety management with the precondition that the external macro regulation mechanism has been changed and improved and the internal micro managing system has made an adjusting influence on non-governmental banks. Operating management, perfect service and consistent innovation are the internal impetus and sources of the development of non-governmental banks, providing chances for it to make a profit. Within the whole process, medium management of the business leagues and the establishment of intermediary institutions’ safety management service provide reliable systematic security for the safety of the non-governmental banks. This thesis exerts explorations from the macro, meso, micro aspects of modern non-governmental banks, namely the safe management of non-governmental banks embracing the internal control of bank, self-regulation of business organizations, and external systematic supervision. What is more, for each part, the changing development and gradual improvement of non-governmental banking safety management is perfectly embodied in the axle of time. Seven parts constitute the whole thesis.Firstly, the introduction part, this paper selected topic background and research purpose, literature, determine the research ideas and methods, the article studies the defining the related concepts and theories, and summarizes the research methods, innovation and deficiency.Secondly, through analyzing the financial ecological environment of modern non-governmental bank development and restoring the turmoil and terror of semi-colonial and semi-feudal society, we can easily draw the conclusion that financial market is dominated by foreign banks, thus worldly political and economic turmoil directly influences domestic market and quickly transmits to non-governmental banks, bringing danger and crisis. Besides, owing to the turbulence of domestic political society and the vulnerable economic development, stable financial market is a dream. Plus monetary system disorder and frequent outburst of social agitation more or less bring security implications to the non-governmental banks. It in itself reflects several problems like early inexperienced management, incompetence and high risk, for it sets up peak development and bankruptcy system during the process of its own development. However, in such tough environment, some non-governmental banks survive and go far. No matter how tough the financial environment is, some non-governmental banks obtain prolonged and stable development through reasonable and safety management.Thirdly, the internal controlling safety management of bank is the micro foundation of the whole safety operating financial system. If the non-governmental banks do not have strict and perfect safety management system, autonomous governance of the peer organizations and external supervision achieve correspond results, and even lead to the failure of all the supervision activities. In its developing procession, Modern non-governmental banks gradually build efficient internal controlling system and highlight the safety management both from the selection of organizing system and establishment of governing structures. Initially adopting the joint stock system, it creates proxy agent relationship, gradually improves the governing system and strengthens the inspecting system, thus to promote the safety management efficiency and avoid operating risk. In the managing process of assets-liability, it gradually enhances safeguards to fund, actively absorbs deposit, and enlarges business scope, retains enough capital for mobile crisis, advocates loan on security and credit investigation, and reduces the occurrence of credit risk.Fourthly, as a matter of fact, management and self-regulation of peer organizations is the supplement of government supervision. However, owing to the specificity of Chinese modern political environment, bank association has particular effect on the safety management of non-governmental bank. Bank association, together with banks all around the country designates consolidated code of conduct and criteria, communicates with the government and outside world, maintains the interests of the whole banking industry and establishes efficient safe managing intermediary agency, ensuring banks in perfect control. In addition, it helps to build mobile guarantee system, thus to offer timely support and fund to the bank under the condition of surging storm in the banking industry and frequent bank runs. To some extent, it functions as “bank’s bank”. Besides, bank association sets up bank clearing intermediary agency on the basis of joint preparing committee. Not only does it fill the void of banking clearing house, but also get rid of the stumbles of money shop, thus to realize the initial construction of modern settling accounts system. In recent years, financial fraud prevails and many people are lack of strict credit consciousness. Under such social circumstances, in order to properly avoid the frequent occurrence of credit risks, it is a must to establish reasonable credit system and advocate banks to launch credit investigation on banking investment loan.Fifthly, government has always been the dominant power of institutional changes. Although modern China has been in political chaos for a long time, the government has never cease to explore the financial laws and regulations and establish supervising system. Consequently, banking laws and regulations have been gradually formed and improved. It has established many relevant supervising requirements like banking admission, daily management, cleaning and deleting. It also has limited small-scale bank’s erection and unlimited bankruptcy so as to strengthen governmental supervision. It gradually creates the rudiment of banking supervision system dominated by financial department, standardizes banking behavior, promoting banking safe management and obtains supervising interest of governments. In addition, the influence of diverse social public and media opinions has strong supervising effects and has a positive influence on managing the business and activity of non-governmental banks. All sectors of the society tend to take part in the banking supervising activities through public opinions and criticisms or through media advocating and spread. Public magazines being the medium, it has built public opinion service, asking banks to expose managing information on the relevant newspapers or magazines, accept the public surveillance, and communicate with banks through publically publishing comments or articles.Sixth, modern non-governmental banks have gained great achievements on banking safe management. Through creating consistent and deepening safe managing system, it has efficiently defused and reduced marketing risks, mobilizing risks, credit risks operating risks and so on. As a result, running excellent non-governmental banks has gained continuous profit and quick expansion in tough conditions. Its successful experience provides the developing non-governmental banks of our country with essential implications from macro, meso, and micro reasonable safety management.Seventh, summarizes the full text, it is concluded that the realization of the private bank safety from micro, meso and macro three levels for the conclusion of reasonable and effective management.The main purpose of financial history research is to explore financial history, find the rule of development and get enlightenment in reality. Through studying the safety management of modern non-governmental banks comprehensively and deeply, this thesis has following enlightenments:First of all, non-governmental banks need to establish a reasonable mechanism of macro regulation in order to implement safety management. At present, private banks will encounter incalculable risks and uncertainties at the beginning of its development, and regulatory authorities should gradually establish a rational system of non-governmental banking supervision to publish related regulatory laws and regulations as well as strictly implement these laws and regulations so as to control private banks effectively. It is essential to pay attention to the prevention and management of risks in the process of formulating laws and regulations, which means that strict rule systems should be established from beforehand prevention at the beginning of its preparation to the supervision and restraint in the management process and to the final exit and clean-up. The safety management of private banks should be ensured and its positive creativity and development potential should also be protected and exerted. Under the system of financial separate operation and supervision, China Banking Regulatory Commission is supposed to strictly enforce the compliance of non-governmental banking business and the prudential regulation. Regulators promote the standard, rationality and prudent management of non-governmental banks on the basis of bank regulation and capital management measures in order to control the operating risks and guarantee its safety. Problems found in the process of supervision should be handled and solved in time to establish an overall risk judgment mechanism of private banks, which can improve the coordination of supervision and avoid the repetition and cross regulation phenomenon, creating fair competition for the development of private banking business and providing a safe and dynamic market environment. Stable operation and smooth development of non-governmental banks is closely related to the liquidity support of Central Bank, as a “bank” in the bank, Central Bank is supposed to effectively implement its role of the lender of last resort, fully fulfilling its capabilities of daily liquidity support and crisis rescue, which needs to rely on the currency market, timely and reasonably uses the traditional and innovative monetary tools to influence the liquidity of non-governmental banks to control or alleviate the liquidity risks of private banks and further provide non-governmental banks with the guarantee of safe operation and long-term development.Secondly, non-governmental banks need to build an effective medium governance system in order to ensure its safety. The development of non-governmental banks must have the coordination and management of mediation organizations, which offers timely rescue and protection, such as the construction of industry self-discipline supervision system and the improvement of the social public opinion supervision system, determining the direction of management of private banks and improving the capability to guard against moral hazard. At present, as a self-discipline organization, the Banking Association actively assists China Banking Regulatory Commission and the Central Bank to help improve the safety management levels through improving the supervision and coordination of banks, strengthening the construction of industry self-discipline and restraint system. The government has a tendency to gradually release the constraint and assurance towards state-owned banks, intentionally strengthening banks’ independent consciousness and strengthening banking supervision through the market mechanism. Therefore, it becomes more important to establish liquidity assurance mechanism, and it is essential for private banks to get ample liquidity to safeguard the interests of the depositors in a crisis, or provide certain insurance for liquidity. Setting up and improving deposit insurance system can achieve mobilized assurance and enhance business competitiveness of private banks in the financial markets. non-governmental bank depositors admission also assume certain risks to strengthen their awareness of the risks and prudently choose non-governmental banks and strengthen the restraint mechanism of prudent management of the market towards non-governmental banks, inhibiting the moral hazard and adverse selection behavior in the process of business operation, timely supplementing capital, reasonably controlling risk-weighted assets and maintaining reasonably believable capital adequacy ratio. Credit intermediary organization plays an indispensable role in the operation and business norms of successful non-governmental banks. Market risks can be recognized and adverse selection problems in lending and investment can be resolved through the credit intermediary information sharing mechanism, realizing the safety of the bank working capital. At present, China’s credit reporting and credit rating agencies are in the preliminary development and preliminary credit mechanism and the rating system has already been set up, but its function as credit intermediary is not significant and its role in specifying and preventing bank credit risk is not effective. Credit intermediary institutions must build and improve its internal organization, have mutual connection of enterprise and personal information so as to provide more safety management services for non-governmental banks. It’s also important to clear the credit communication and disclosure among enterprises, improve the comprehensiveness and professionalism of credit investigation, improve the management of the imprecise rules and solve the problem of the shortage of the depth of information sharing, which plays an active role in specifying the development of non-governmental banks and secure its management.Finally, precise micro management mode is needed to realize of the safety management of non-governmental banks. Strict and effective internal control mechanism is a necessary condition for non-governmental banks to implement the safety management and gain profit and rapid development, through formulating strict internal management rules and establishing a reasonable internal governance structure, conducting a reasonable and standard operation from behavior of the employee to the assets and liabilities business, paying attention to risks and safety of the management all the time. Both absorbing deposits and issuing loans are supposed to comply with the principles of safety management and ensure the adequacy of the internal capital to prevent the pursuit of high profits without noticing the risks. Non-governmental bank capital adequacy ratio is higher, can improve internal ability to resist risk of the bank. At present, the non-governmental bank supplementary capital way more diverse, but through the effectiveness of financial innovation and financial market, supplement the capital by market means, improve the capital adequacy ratio is the main way to make reasonable financing from the bond market and equity market.We should adhere to the differentiation of non-governmental banking business and admit its unique personalized business style because differential operation is an effective way for private banks to achieve success in the competition, and internal creativity should also be actively mobilized to win the market with innovation and avoid risks. Innovation is the foundation for the development to be further improved, and modern non-governmental banks has a wealth of creativity in management and system construction, and innovation can be observed from the choice of the bank system to management, from the development of business banking market to the richness of the financial products. What’s more, it is essential for non-governmental banks to deal with the relationship with the government in order to keep the independence of the bank management. The independence of non-governmental banks is the premise condition for it to give full play of its vigor and improve its creativity, and management cannot be limited by the will of government, in addition to comply with the relevant laws and regulations and other specifications, operation and management should be in liberalization and independent development, only by this, can private banks have a long-term development prospects.There are several innovations in this thesis. Firstly, there are only few researchers who have studied modern non-governmental banking from the angle of safety management. No literature has been found to study modern non-governmental banks from the perspective of safety management, and most of the research literatures about modern banks did not explicitly put forward related concept about banks’ “safety management”. Secondly, the thesis conducts a systematic research by combining the internal mechanism with external system of modern non-governmental banking. There are many case studies of non-governmental banks, but the key has been basically focused on the general situation of the investment loan of a non-governmental bank, and the comprehensive study combining the internal factors and external environment with intermediary system can rarely been seen. Thirdly, the study is dynamic under the view of history. Existing researches are all focus on a certain angle or a particular point in time, and there are few researches having studied non-governmental banks with a long history from the comprehensive perspective which takes factors such as financial economy and the social public environment into consideration.