China's Securities Companies In Financial Difficulties And Institutional Economics

Among the 14-year developing history of China's stock market, the securities cor-poration had enjoyed a golden time. But with a sharp pludging of the market from the second half of 2001, the institutional defect of securities market system has come to exposure, securities corporation has fallen to a more than 3-year running dilemma. As an ultra product of the market economy developing based on private property, se-curities market is incompatible with the state-own right and planning economy. Based on the state-own right, the government playes as both rule-maker and participant in a game, which leads to the substancial defect of outer institutional environment sur-round the securities corporation. Securities corporation is owned by government, but at service for the investors, the benefit conflict of the two would certainly push it into a institutional dilemma. Because the outer mother system has decisive influence over the inner subsidiary system, the inner organization structure of securities corporation has common failing as other state-own enterprises, such as bureaucratism, over-staffing, expanding blindly and reckless, etc. Outer and inner institutional defects were both reflected in securities brokerage, in-vestment banking and innovation field. The running mode of brokerage is too old-fashioned, resulting in a predicament of homogeneous competition. The financing permission right is monoplied by government, forcing the investment banking to turn into a rent-seeking competition. The experiment citing of securities innovation is con-trolled by government, making the innovation market is unfairly divided up by few securities corporations which are supplied by government. The solving of instituional dilemma of securities corporation is a systemetical work. The writer believes, through transformation of outer property system and exchang system, diversification of inner stock structure, innovation of running mode, develop-ment of net brokerage and international expanding, the running benefit of securities corporation could be improved.