Financial Functions Under A Different Financial Structure Research

This thesis studies different financial structures - focusing on financial market or bank medium - as well as their mechanisms and effects of converting savings into investments. The theme of this thesis is "finance and economic growth". On the basis of a review of the up-to-date theories of financial structure and financial function, the financial functions of different financial structures, namely, those of the United States, the United Kingdom, Germany and Japan, are studied. The diesis investigates the formation of different financial structures as well as their characteristics, and presents an in-depth analysis of the specific financial functions. advantages as well as limitations of these financial structures in converting savings into investments, providing risk management, processing information and solving problems of encouragement in the environment of information asymmetry. The evolution trends of different financial structures are also discussed. It is maintained in the thesis that financial structure of a country should not merely be confined to the relative position of the financial market and financial medium external to businesses. Rather, it must also include the following three links. Before financial market and financial medium convert savings into investments, they share and manage risks so as to stimulate savings; during this process, they provide information as the basis for decisions related to resource allocation; and after the process, they solve encouragement problems to ensure the achievement of goals of resource allocation.The thesis argues that bank medium and financial market are complementary in providing financial services and promoting economic growth. It is maintained that different financial structures will benefit from mutual incorporation. The problems with the financial system in China include its unreasonable financial structure, and consequently, its inadequate financial function. As such, the next step in the financial reform in China should shift its focus from pursuing purely quantitative development to upgrading financial quality, which includes the improvement of financial structure and financial efficiency. For this purpose, policies aiming at improving the financial infrastructure prove more effective than those operate directly on the financial structure per se.