Behavioral Distortion Of The State-owned Financial Institutions And Supervision Mode Arrangement

The state-owned financial institution plays an important role in China's financial and economic systems, but it possesses the defects of poor output efficiency, expensive operating cost, and serious infringement, so it is of academic and practical importance to study the behavioral characteristics of the state-owned financial institution and to regulate it.Firstly, this paper analyzes the reasons of institution behavioral distortion. The state-owned financial institutions in China are born from the planned economy and the overtaking strategies, and deeply influnced by the government. The government's unfit regulations destroyed the sorting mechanism of the equilibrium, resulted in the low efficiency and declining social surplus, likewise caused the abnormal variation of the evolvement path and the maximum supervision cost. Moreover, the government prefers expanding the state-owned financial institution's scale and realm too much, leading to the low efficiency, high cost, and ?serious infringement.Secondly, this paper explains the supervision dilemma and designs the supervision system. The poor effects of the current supervision come not only from the rule rip and incorrect implementations, but also from the actually unfulfilled responsibility of the person. The paper analyzes the economic role of the state-owned financial institution operator, sets up a principal-agency model about the bureaucracies with China's characteristics in the financial institutions, trying to seek the rational equilibrium in the supervision procedure with the subgame perfect Nash model.Thirdly, this paper introduces the concept of the degree of the supervision from a qualified micro-ecomomic aspect to explain the supervision. The supervision is essentially a disturbance to the market, and may lead to the order or to the chaos because of the nonlinear transformation. With the complex dynamic model, the paper argues that the chaos could be controlled by the external factors and that the system would lead to the order, this paper also gives rational explanations to the supervision's forecast, externality, prudence and time lag.Lastly, this paper emphasizes the importance of the moral and the cultural restrictions. It tries to use the traditional and the advanced cultural essence in the management of the state-owned financial institutions from the restricting oneself, restricting others, and restricting with laws, hoping to set up a suitable and comprehensive framework for the state-owned financial institution's management, containing the formal and the informal institutions at the same time.The innovations of this paper contain that, analyzing the behavior distortion of the state-owned financial institutions, explaining why the supervision effect not good, setting up a principal-agency model about bureaucracies with China's characteristics, designing the supervision institution, studying the degree and the realm of the supervision with the nonlinear dynamic model, emphasizing the importance of the moral and the cultural restrictions to the management of the state-owned financial institutions.