Research Of The Comprehensive Evaluation On Financial Efficiency Of China

Finance is playing a more and more important role in modern economy. It is a critical factor to keep the economy stable. Before the reform, China adopted a command economy. The Chinese government controlled the distribution of capital, instead of the financial market. During the reform, China changed to a more market-oriented economy and the economy grows very fast. The rapid growth of financial industry is a strong support for the development of economy, and it has become the central issue modern economy. Chinese financial industry has great achievements during twenty years’ reform including the enlargement of financial system, the enhancement of financial structure, and the integration with global standards. However, there are still many problems in the developing of financial industry. The low efficiency of using capital is one of the biggest obstacles. It is obvious that improving the financial efficiency is very important.Although the problem of financial efficiency has been more and more focused on because of the late starting of financial efficiency theory the there has no agreement on the definition of financial efficiency by now. Also there has no a common framework on the systematic analysis on it. The research of financial theory and the empirical analysis does not match. According to this we attempt to conduct an overall research on financial research. After split the definition of financial efficiency into 3 layers we use the theory micro-financial efficiency, the thought of financial engineering and the theory of financial market efficiency to measure the efficiency indicator of every layer and then construct the indicator system using a two-period evaluation model to get the ingredient indicator. This is a new exploring on the evaluation of financial efficiency.According to the arrangement of the contents, the whole paper can be divided into six chapters.Chapter 1 reviews recent research about definition of financial efficiency, the theory of financial efficiency and the quantitative research of financial efficiency. Finally the author makes a conclusion by his own analytic framework.Chapter 2 has some new creative research point. The first point is the definition of micro-financial efficiency. The second point if to use the financial sector efficiency to evaluate the average value of financial institutes’ efficiency. The third point is to introduce the risk factor as a kind of cost indicator into SFA model. Finally we conduct the dynamic efficiency analysis by risk adjustment.Chapter 3 is to disclose the standard of financial market efficiency. In this sector the author firstly introduces the function and the development of financial market. Secondly according to the EHM the author make an empirical research on weak form tests of our capital market. Thirdly illustrate the limitation of EMH, and use the model of Wurgler capital allation model to calculate the allocating coefficient at the same time the author points out that the allocating coefficient of financial market is the real reflection indicator of the financial resource allocation.Chapter 4 introduce the meaning of the macro-efficiency layer which is to reflect the promotion on macro-economy of financial system. In this part the author investigates the relationship between financial system and the economy system based on the Pagano-AK model and extract the key indicator to measure the efficiency of macro-efficiency layer. At the same time focus on the reason of the low ratio of saving-investment conversion.Chapter 5 concerns about the ingredient evaluation of financial efficiency. The author construct a indicator system and makes the two-step ingredient evaluation by using the AHP model and the BP-ANN.Chapter 6 based on the previous research, proposes a comprehensive framework to manage the macro financial efficiency. It includes three layers which are micro-efficiency, semi-macro-efficiency, macro-efficiency and a great variety of instruments.The article makes some good conclusions from the framework. The result of the comprehensive evaluation of the financial efficiency indicates that the whole level of China’s financial rises slowly. The micro-financial efficiency is improving that shows the financial deepening in China is increasing. The number, size and quality of financial institutions are on the rise but there is still a big gap of financial market efficiency and macro-efficiency between China and the developed countries. China’s financial market is still in the initial stage of construction. The market still has very low allocating function. The financial system of China also needs to be improved The overall saving-investment ratio of China’s financial system is still very low. This indicates that it’s not the correct way to improve financial efficiency only rely on increasing the amount of financial institutesTo sum up, the article constructs a system analytic framework and unites to an organic integer in four ways including definition, measurement, overall evaluation and management of the financial efficiency.The frame work of financial efficiency evaluation in this article makes a addition to the defection that the empirical research is detached from the theory development, and also makes some improvement on the evaluation.The author hopes the work already done will bring new insight to the regulators and researchers of the financial efficiency. More important, it can lead to more consideration about the macro financial efficiency research.