The Transition Of China's Financial Supervision

Since l970s, with the financial innovation and the development of financial market, manyconcepts are a1ways in changing and the systemic instability is greater and greateL Especially, in l990s,the accumu1ated risk broke out as the financial crisis that led the social instability and economic depressin many countries. So we have to reflect on our financial system and pay more attention to financialregulation. Recently, the necessary of regUlation was understood deePly But wituh the economic andfinancial globalization, how tO regUlate our own financial system is a nowadays problem. In thisdissertation, the concept of financial regUlation in economic conversion was discussed. The regulatorystructures and practices should be properly aligned with the rationale for regulation.There are four levels in the dissertation. The first is about the theory and system of financialregulation. The second is the basics and function of regulation. The third is regUIation structUre. The lastis the opermess and cooperation of fmancial regUlation.The history of financial regUlation in other countries is a mirror for.us. Based on the history thedirection and apprdach of our financial regUlation structure. can be clear up although the regulationsystems are diversiform in different countries. In China, an integrated and effective regulation systemmust be set up. The regUlatory resources must be allocated where they aremost needed, and the gaPs, duplication and confiicts in regulation must be excused almost. Threesuggestions were given in followings. The first is to separate the functions of the monetary policy ofnationa1 bank and the financial regUlation. The banking regUlation shou1d be set up independently. Andthe monetary policy should be planed by the national bank independently too. The second, the regulationsystem should be adjusted based on the pervasion of different industries. And an integ'rated and effectiveregulation conunittee should be built. The last is strIJctural regulation must be transferred into functionalregulation.Financial regUlation is a special financial service. It heavily affect on the financial increments andasset quality. Finance regulator should work for the public interest. Financial regulation is an importantpublic product or public service. According to the theory of public product and public selection, the tfinancial regulation is non-competitive and non-exclusive. TO strengthen financial regulation should notbases on the local interest. A equal and orderly financial envirorunent should be created to protect allmarket participants. -In the thesis, the limitations and the bugs of the administerial finance regulation were analyzed. Inorder enhance the financial regulation, the irraional exPand of regUlation institution must be avoided.Based on the basics of financial regUlation and the begirming of our financial reform, the governmentshould play' a necessary role in drawing the regUlation system. But if the administenal finance regulationis the only model, the financial regulation will be asyrnrnetric. The financial regulation must betransformed from administration system to market system. And the decision-making model should comeinto being based on market information.In the thesis, the efficiency and benefit of financial regulation were discussed. In general, thebenefit can be seen indirectly, in another word, the losing without regulation. And the costs are directand inditect. Applying the economic method, the benefit of regulation was analyzed. But the analysisonly based on economy is not enough. In further, the effect of regulation on the allocation of resourceswas discussed. To realization the effective allocation of resources is one of the major functions of lfinancial regulation in China. From the point, some key processes of regulation in allocation of resourceswere suggested.In the dissertation, the financial services in different countries were compared. And the gap betWee...