On Fair Allocation Of Financial Resource And Legal Protection

Financial resource is the concept of the economy. It seems to have no relations with thelegal study. However, in recent years, with the deepening of China's market economy reform,the low degree of marketization of the financial field, the lagged reform of the financialsystem, regional differences, industry differences, ownership differences in financialdevelopment, are increasingly shocking to be lied in front of the people. Wu Ying who is thepresident of Bense Group from Dongyang Zhejiang Province, was sentenced to reprieve forillegal fund-raising770million yuan RMB in May2012. The case is still being rejudged bythe Supreme Court at present. It seems to be a criminal case. It indicates the huge demandof the financial resources and the haphazard development of the Chinese private sector,which is outside the system. It is the formal financial system that cannot meet the hugefinancial needs, which gave birth to a large number of illegal fund-raisers to ignore the law.Why are the demand and supply of financial resources showed in such a tragic way? Is it therecklessness of the illegal fund-raisers or the unfair allocation of financial resources? As aresult, we have to face the fair allocation of financial resources. This paper attempts tosummarize systematically all the allocation injustice of financial resources, analyze thecauses of the problem and look for legal measures.There are five chapters in this paper. The framework is organized as follows:The first chapter, the Allocation of Financial Resources: New Perspective of LegalStudiesThis chapter is divided into three sections.The first section elaborates the produce of the concept of financial resources, the specificmeaning of the core substance and the allocation of financial resources. Both traditionalconcept of finance and traditional concept of resources do not recognize finance as a resource.However, with the rapid development of finance, financial is increasingly showing its uniqueproperty as financial resource, which creates the concept of financial resources. The coresubstance of the financial resources can be extracted as: it is not only the economic operation of the intermediary and tools, but also a set of natural resources and social resources, whichhas strategic importance to economic development. The financial resources have thenecessity and possibility of independent allocation. The allocation of financial resources isthe portfolio allocation of quantity and direction between the market and the Government indifferent operators, industries (sectors) and regions on the basis of specific economy system.The second section describes the meaning of financial resources concept to legal study,and summarizes the specific scope of financial resources in Law Perspective. Financialresources concept provides a new idea for understanding the nature of financial propertyunder modern economic conditions, and also provides a new perspective for the financial law.Since financial resources are the areas that need to be configured independently, then whocan be the allocation subjects in the legal sense? What are the definitions of the allocationsubjects? Is there any injustice practice in the financial allocation? How to improve andreshape the legal system in order to protect fairness? All of the issues are to be faced andresolved by the legal study. As the basis of legal study, the financial resources come fromthe economy, and are limited to objective of legal relationship. The scope of the financialresources in legal sense is different from the scope of the economy. It is acknowledged thatthe financial resources include three sections in legal sense by analysis, the basically financialresources, structurally financial resources and financial commodity resources.The third section analyzes the market allocation and state regulation of financialresources by the theory of the state regulation in economic law. It is considered in thispaper, the single market allocation of financial resources will run instability, unordered andprofit pursuit, which strengthens the inner fragility of the financial system and intensifies thepossibility and uncertainty of the financial turmoil. The free transaction of the market cannotresolve the issues above, so it needs outside strength beyond the market limit its influence,which provides the important foundation for the States to involve in the financial market.Generally, it is corrected by the States through the establishment of the legal system offinancial regulation, the financial supervision of the legal system and the legislation ofenabling allocation of financial resources. In the financial resource allocation process, marketand government are indispensable.The second chapter, the fairness of the of financial resources allocation and the update of the traditional values of financial lawThis chapter is divided into three sections.The first section describes these representative views of resource allocation fairness,which pave the way for the definition of fair allocation of financial resources. It is true thatallocation of resources cannot be achieved fully equal, after analyzing the Aristotle' sThoughts about fair distribution, Rawls' s Justice and Ronald' s Resources Equality. It is aneffective method to achieve the social fairness by giving the appropriate tilt and care of thecongenital disadvantaged through the system and protect those who gained less to get morerights and opportunities for development. The government is essential in the process ofresource allocation.The second section defines the meaning of the fair allocation of financial resources fromthe allocated objective and demand objective of the financial allocation. Financial institutionsand the government control the configuration of the financial resources. For financialinstitutions, the fair allocation of financial resources is the fair opportunity and faircompetition. To the government, the fair allocation of financial resources is the fairrule-making and the fair result-receiving. For the financial resource demanders, it is the fairdevelopment. It is considered that the fair allocation of financial resources reflects the interestdemand of the society, the pursuit the integrity and generality of the interest. When the socialinterest conflicts with the individual interest, for the fair allocation, it should lay stress onstanding on the social interest, consider the financial demands of all classes, groups andregions, give the fair opportunities to gain the financial resources for the financial demandersand allocate the financial resources for the financial institutions. Meanwhile, it should adjustthe unbalanced results on the premise of the fair opportunity in order to realize the unity ofthe formal fairness and the essential fairness.The third section rethinks that the binary value concept of the traditional Financial Lawis financial security and financial efficiency value, which can do nothing to correct the unfairof financial resource allocation. The fairness of financial resources allocation should be oneof the necessary values of the Financial Law. In this paper, it is recognized the three valueconcept of financial security, financial efficiency and financial fairness. In its opinion, it isthe start and first step to attempt to resolve the unbalanced problems in the practice of the resources allocation, which expands the binary structure with financial security and financialefficiency to the three value concept with financial security, financial efficiency and financialfairness.. The financial resources allocation fairness is closely related with the financialfairness. Fair finance includes the equitable allocation of financial resources, financialconsumer protection, the social responsibility of financial activities, the assurance of marketequality and efficiency. The financial fairness if the upper concept of financial resourcesallocation fairness and the financial resources allocation fairness is the most important part ofthe financial fairnessChapter III, the status and consequences of unfair allocation of financial resources inChinaThe chapter is divided into four parts.Section I summarizes the various manifestations of the unfair allocation of financialresources of urban and rural areas. The allocation of financial resources of China's financialdevelopment in urban and rural areas demonstrates clear non-equilibrium and tendency ofurbanization. On the basic financial resources allocation level, inflow and outflow offinancial resources in rural areas are seriously unbalanced. Rural currency resources tend toconcentration of upper financial organizations from bottom financial organization and ofurban areas from rural areas. Rural capital resources allocation has also beenstructure-unbalanced. Agricultural and township enterprises credit is lacking. Capitaldemands of farmers cannot be met. On the level of the institutional allocation of financialresources, types of financial entities in rural areas are limited. Currently, except from fewstate-owned commercial banks, there are only rural credit cooperative agency, agriculturaldevelopment bank, postal savings and new-type rural financial organization booming theseyears as formal finance in rural financial market, among which rural credit agency is onactual position of monopoly. It shows formation of rural financial market competition order.In addition it worries that rural financial organizations goes far from rural service purpose inrecent years. On the resource allocation levels of financial products, financial instrumentsdevelopment in the rural areas is lagging behind, the growth of supply and demand offinancial products is relatively weak. The distribution of financial products in rural and urbanareas is seriously unbalanced. Section II summarizes the main performance of the unfair allocation of financialresources in the eastern and western regions. On the level of basic financial allocation, thereis a uneven loan distribution in the eastern and western regions. According to statistics,capability to control financial resources in eastern region is clearly stronger and it in middlepart weaker, in western part basically unchanged in recent years. There is huge difference inper capita financial resources distance for east, middle and west and in the size of the stockmarket trading of the eastern and western regions; the insurance industry in eastern andwestern regions is not balanced. On the level of the institutional allocation of financialresources, financial organizations like banks mainly lie in the east. The number ofdistribution of bank, securities institutions in the eastern regions is much higher than in thecentral and western regions. Security organizations distribution in east, middle and west isalso as unbalanced as banks. There is clear superiority for eastern security organization innumber, size, and capital and so on. It plays a leading part in China' s security market.Section III outlines the specific performance of the unfair allocation of financialresources between the state-owned and non state-owned economy. Although proportion ofnon-state-owned economy to GDP has gradually increased, still non-state-owned economy ofthe country's financial support is very limited, which is opposite to its contribution. A greatnumber of financial resources are allocated to state-controlled listed companies withdeclining output ratio. Financial entities in security market are mainly state holding listedcompanies as well. State-owned financial institutions in China's financial markets not onlyhave the capital and number advantage, but also lie on a monopoly position for businessoperation. Non-state-owned financial institutions are usually with limited number,small-scale and limited business scope. It absolutely can not be compared with state-ownedfinancial organizations.Section IV illustrates the serious consequences of allocation injustice of financialresources. Theoretically due to unbalance of financial resources supply and demand inlocation, line and group, accordingly financial resources allocation tends to unbalance. Properunbalance is useful for financial development. Over-unbalance is not only good to financialdevelopment, but also leading to a series of bad results. It leads that social income gap isgradually increased; also leads the imbalance of social and economic development; the development of private finance, which runs outside the system, causes a higher risk of moralhazard and a series of legal cases.The fourth chapter the reasons of the unfair allocation of financial resourcesThis chapter is divided into four parts.Section I think the offside of government functions, excessive control of financialresources is the primary cause of unfair allocation of financial resources. Current financialresources allocation mode in our state is not simple planning economic mode, and neitherpure marketing economy. It is mostly between the two. But government system plays a basicrole. Under double allocation of financial resources, government has double position infinancial market. One is to adjust out-of-work financial market to maintain financial orderand stability, the other is to directly control financial allocation to offer cheap and sufficientfinancial resources to economic development within system. It leads to the offside ofgovernment functions. Excessive control of financial resources of government in interestrates stock, credit number and orientation of the money market, the number of listedcompanies and the number of stock offerings, the flow of monetary resources have led toserious uneven financial allocation of resources between state and non state-owned economy.Section II clarify the state's intention to design the dislocation of the financialregulatory system is an important reason for the unfair allocation of financial resources. Dueto out-of-work financial market, it' s necessary for government to regulate finance. Differentnations put the aim to limit unfair competition in financial field, protect financial fairness,compete in order; protect depositor, investor and social public interests; keep safety offinancial system, promote financial and economic stable and harmonious development. Iffinancial regulation in practice goes away from above goal, doesn't play its role, and limitbasic resources allocation functions of market system to some extent, it shows thedislocation of the financial regulatory system design. The goal of China's financialregulatory system has gone wrong under influence of over-taking strategy and interestpreference in government itself. Its attention shifts from maintenance of whole financialmarket order to ensure the direct or converted control of the national financial resources inorder to protect the needs of economic development funds within the system. Underdirection of this aim, financial regulatory system extends from two points. First, the government doesn't give or give few opportunities to run financial organizations to investorsof other kinds of system by setting up financial permission system with non-governmentalcapital discrimination to keep state-owned financial organization position of monopoly infinancial market. Financial permission system with non-governmental capital discriminationshows that approval and examination standard for entry of non-governmental capital intofinancial market; threshold of registered capital for non-governmental entry into financialmarket is too high. Second is to offer converted protection for state-owned financialorganizations by incomplete financial market withdrawal system. Incomplete financialmarket withdrawal system shows that current legal regulations are over coarse and specialrules of financial organization market withdrawal.Section III analyzes the unified system of financial regulation is one of the reasons forthe unfair allocation of financial resources between the eastern, central and western regions.Unified deposit reserve makes fund in backward regions lacking; preferential policy ofunified interest ratio level objectively formed in east leads to capital flow from middle andwest to east. Unified market operation and rediscount policy play a limited role inless-developed regions; unified micro-contraction policy is more severe to limit the west. Infact, comprehensive resources endowment, productivity, supply and demand conditions,economic structure, the purchasing power and demand, credit and investment environmentare different in different regions. These differences can not be denied. Ignorance of suchdifferences to the implement an unified financial control policies, is not only unable tonarrow the differences, but also expand the difference between regions.Section IV thinks the lack of enabling legislation is another important reason for theunfair allocation of financial resources. The so-called enabling legislation is the tiltprotection legislation, which refers to the legislators, in order to compensate for theprofit-driven defects of financial markets, to ensure these vulnerable groups, regions,industries having the chance to get financial resources. Whether enabling allocation offinancial resources legislation is perfect, is directly related to the fact that allocation offinancial resources is or is not fair and can or can' t be achieved. At present in China suchkind of legislation is basically in a blank state. First is there are no legislation to supportprivate capital into the financial field. Although government has tried some on its regulations, these policies are mostly encouraging on layer of non-operation, not concretelegal rules with operation force. The effect is unsatisfied. The second is the absence oflegislation to protect vulnerable groups' credit right. The problem can' t be solved perfectlyby depending on market system simply. It must rely on visible helping hand of governmentintervention in that field. Law-making efforts are still limited in our nation. The third is theabsence of legislation of specifications of policy banks. Our state has established threepolicy banks one after another since1994. But currently relevant legislation on policybanks has not been finished, which does not match important position of policy banks anddirectly effects display of state policy type financial role.The Fifth Chapter legal protection of the fair allocation of financial resourcesThis chapter is divided into four sections.Section I clearly pointed out that a necessary precondition for fair allocation offinancial resources is the fundamental position of established market configuration.Excessive intervention of government and driving interest rates down in China's financialpractice has caused a vicious circle between the financial and economic, and serious harm toChina's economic development and influence the fair allocation of financial resourcesdirectly, To establish the fundamental position of the market in the allocation of financialresources, to limit the configuration of the state financial resources in certain areas, andprevent the state from the excessive intervention are the premise of realizing the fairallocation of financial resources. The core of the liberalized allocation of financial resourcesis the liberalization of interest rates. In this paper, it analyzes the liberalization process ofinterest rates of some developing countries and finds that the countries are not successfulwhich liberate the interest rates totally and cause financial crisis. However, the countries,which take gradual measures to liberate the interest rates are successful. The step-by-stepreform will be of great help and good reference to our country.Section II builds up inclusive financial supervision and the legal system. To change thegovernment' s over-control of financial resources through the financial regulatory system, tocreate a competitive, stable and fair financial environment, the regulatory philosophy andregulatory regime need to be updated and reformed.Government should uphold fair, inclusive, independent concept of financial regulation. The so-called fair supervision is that the financial supervision bureau should take the openand same supervision measure to all of the financial institutions and uphold the fair conceptin the rule-making and law-applying. The inclusive supervision emphasizes that the attitudeof the financial institutions should be open and inclusive. Rather than to protect the interest ofthe investment and maintain the order of financial market, it also promotes the share ofachievement of financial development. In the process of allocation of financial resources, theindependence of supervision institutions should be kept and prevent the financial supervisionbureaus from being captured by the local government.The establishment of a fair financial market access system is essential for achieving thefairness of the allocation of financial resources. It is through the establishment of anappropriate threshold, the appropriate control of the risk of financial institutions, to provide afair and reasonable competition for the various types of financial institutions. The accesssystem of equally financial marketing could be carried out by the following steps,formulating the principles for differentiate financial institutions, clearing examinationstandard for civilian capital establishing financial institutions, reducing capital requirementsfor financial institutions in order to private capital to enter, liberating the access restrictions tothe financial business innovation of service vulnerable groups and giving tax incentives andrisk compensation, creating the financial ecological environment which is helpful for civiliancapital admittance.To construct a fair financial market withdrawal system. It refers to the different types,different sizes, different forms of ownership of financial institutions should follow aconsistent principle of market withdrawal system. The States should refrain from individualfinancial institutions for special protection. The criterion of withdrawal the financial marketis its own operation will and objective management of financial institutions. The sizes,ownerships and types should not become a financial institution out of the impeding factors. Inparticular, this is needed to establish the unified legal system of market withdrawal offinancial institutions, set up and improve the market withdrawal of financial institutionsrelated to insurance and compensation system.Section III is to set up differentially financial regulation legal system. Our country has avast territory area the level of economic development in each regions are different, which requires financial regulation body take full account of regional differences in the financialcontrol policies and take differential strategy according to the financial operation. It shouldtake the indirect control as the main form of strategy and the direct control as the secondaryform of strategy in the eastern area. Both the direct and indirect control have to be usedtogether in the middle area. It should take the direct control as the main form of strategy andstrength the indirect control gradually in the western areas.Section IV is the establishment and improvement of the legislation of allocation offinancial resources. It includes the following levels: the first is to develop theimplementation details of private capital into the financial sector, to support thedevelopment of non-state-owned finance according to the Article36of NewNow-State-Owned; the second is formulate the development of new-type rural financialinstitutions Act to support the rural financial development; the third is to learn from the U.S.Community Reinvestment Act "to improve the Assessment System to encourage the localfinancial institutions to put the new deposit on the use of local loan and protect the creditrights of vulnerable groups; the fourth is to speed up the policy of financial legislation, tomake up for the legal regulation of the blank.