On China's Financial Evolution During Transition Period

On China's Financial Evolution During Transition Period Using the theory of evolutionary economics this article studies the motivationand process of China's financial evolution during transition period. Altogether thereare seven chapters including the introduction of this article. In the first chapter we introduce the problem this article attempts to discuss thestudying angles of this article the theory and method used in this article and theframework and innovation of this article. In the second chapter we review the literature about financial development andfinancial evolution by the predecessors and discuss which study can explain China'sfinancial development which can not what we should study follow on. In the third chapter we discuss the motivation of China's financial evolutionduring transition period with original financial backwardness in the background. Thefinancial development of late-developing countries is a dynamic evolutionaryprocess during which the state of financial backwardness should be changed. Thereexists "late-developing advantage" in financial development that is to saylate-developing countries can benefit from learning and imitation. There are two typesof benefit in late-developing countries technological benefit of late-developing andinstitutional benefit of late-developing which form the original motivation of China'sfinancial evolution. In the forth chapter by analyzing the government's behavior we study theinstitutional evolutionary process of China's financial system and the factors thatinfluence the evolution. Typically China's financial system evolution is drove by thegovernment. During the process the government as a economic unit also seeksbenefit this is the inside motivation of China's financial system evolution. Someoutside factors such as technological condition human resource financialinfrostructure economic opening can influence the evolutionary path to some extent.The process of China's financial system evolution is codetermined by the insidemotivationand the outside factors. In the fifth chapter we study the evolutionary process of China's financialproduct innovation and the factors that influence the evolution by analyzing thebehavior of financial institution which is the provider of financial product. Financialproduct innovation is the primary behavior of financial institution. The seeking of IIABSTRACTsuch benefit as the technological benefit of late-developing economic of scale andeconomics of scope is the inside motivation of China's financial product innovation.Some outside factors such as market structure technological condition humanresource economic opening externality bandwagon effect can influence theevolution path to some extent. Using Scherer's model we study the case of China'sMoney Market Fund analyzing the influence of market structure on the institution'sinnovation behavior. In the sixth chapter we study the evolutionary process of China's financialstructure and the factors that influence the evolution by analyzing the behavior ofinvestor which is the main demander of financial product. The evolution of financialstructure is the change of financial institution form which is the result of investor'schoice to a large extent. Investor's choice is mostly influenced by the attitude to riskand the expectant income. In the long run investor's attitude to risk and the expectantincome will change so investor's choice will change accordingly and this willinfluence the dynamic evolutionof financial structure. In the seventh chapter we summarize the performance of China's financialevolution and view the future of China's financial evolution.