Financial Globalization And Banking Reconstruction

The economic growth comes again although the repercussions of last round of financial crisis which happened at the end of 20th century still are noise beside our ears. Anyway, no countries resolve the domestic banking problems much effectively. It's too early to say that the era of financial crises is over. Actually, more evident fact is: financial globalization is going on with the globalization of risks, this is a rigorous challenge to the banking of every country who is not going to refuse participating globalization.Financial liberalization and financial globalization have been developing simultaneously, and stimulate each other. As a p.'jcess full with conflictions, financial globalization brings a positive change to the world economy but creates a series of problems. To some extent, globalization is just in a whirlpool of difficulties. However, this risk situation is not because of a failure of globalization but of its structural shortcomings when it steps on fast.Whatever the conflictions exist between reality and theory, there is obvious evidence shows that the mean stream economics have a same idea about the important functions of financial institutions, and pay a lot of attention to it. The research range is extending to the imperfect market and market failure, including transaction cost and asymmetric information. Banking is becoming the main sector of research. Micro finance focuses on corporation governance that is relative to financial institution building, this provides a new case to Ronald I. Mckinnon and Adward Show's theory, we can never ignore the important role of banking in macro economy. In fact, each country that experienced the modern financial crisis had an unsound banking system.Albeit there are some kind of relationships among financial liberalization, globalization and modern financial crisis, crisis is not necessary an unavoidable result of liberalization and globalization. Mistakes are the fee we must pay for, crisisis just unique way of warning to investors that there do exist risks with the process of globalization.We do have lessons that, banking crisis is the core factor of financial crisis. On one hand, banking crisis creates contagion to others and leads to financial crisis, on the other hand, even banking problem is not the main reason for creating financial crisis directly, still banking crisis will happen and lead or deepen the financial crisis Any countries where suffer financial panic or unrest have to face the problem of banking rebuilding either in developed nations or developing and transition economies. China has escaped from last Asia financial crisis but the banking fragility is also a serious problem, when we face a new financial environment after WTO entry, in this case, strengthen banking's competitiveness is much more important and urgent than financial globalization itself. In my opinion, banking fragility of developing countries or transition economies is not because of the financial style they chose but of the equity structure defect within their banking systems.This article studies the factors associated with financial globalization, attempts to understand how and why financial crises might occur with globalization trend, and some of their consequences. It also undertakes a thoughtful discussion of various countries' banking system structure and the way of banking rebuilding after crises as well as possible policy measures that might be used to reduce the potential for banking crises to occur.China is still on the way of transition to market economy, in the near future even in the long run, do we need to change banking-orientation finance into market-oriented finance for the real economy? I will argue that we actually do not need a very explicit objective of what the financial style we do choose. All we need is some agreement that whatever we chose-direct financing or indirect financing, we should rebuild out banking sector. It's hard to say which style is better than the other, rather we say both of them have their advantages and disadvantages, t...