The Study On The Evolution Of Financial Systems In East Asia

The global system is appearing convergent in the economic field recently. The market-oriented financial system is becoming a mainstream, though there is no doubtless conclusion which financial system is better as for market-oriented financial system or bank-oriented financial system in the academia. In East Asia, almost all the counties have suffered from the financial crisis except Japan and China that kept strict capital regulation at that time. After the financial crisis, all the countries faced great challenge of reconstructing their financial systems. Many economists from west countries insist such a view that the countries in East Asia must develop financial markets to make their financial systems out of plight. They also think that this is the only way. In reality, the evolution of financial systems in East Asia seems to be different. The countries suffering the financial crisis are forced to reform their financial systems. China and Japan are positive to reform their financial systems. But bank has still played the main roles in financial systems of almost all countries in East Asia after the reforms. Different from the other countries, China is a transition country. The reform of financial system in China is a course of transition at the same time. So the study about the transition of financial system in China considering the evolution of financial systems in East Asia is a problem worth to research. The paper is to solve such a problem. The paper can be divided into 8 chapters.Chapter 1 is the introduction. It introduces the basic conceptions such as financial system, evolution and transition and their relations, research purpose and significance of the thesis, summarizes the existed theories and analyzes the different angle of view of the paper, presents the framework and analysis ways of the paper and indicates the innovations, limits and research directions in the future.Chapter 2 reviews major schools of the theories of financial system in an all-round way and the recent development in the area and point out the weakness of the existed theories. In this part, the author discusses all kinds of theories, including the early research, financial structure theory, financial liberation theory, financial restraint theory, endogenous financial growth theory, financial service theory and lawand finance. At last, the author tries to establish a uniform analysis framework.Chapter 3 analyzes the functions and evolution principles of financial system. It proposes the six main functions of financial system: investment and finance, liquidity provision, risk diversification, price discovery, information production and corporate governance. Through a comparative model about the efficiency of market financing and bank financing and econometric analysis (cointegration and Granger causality test) based on time series data of the United States and Japan, the paper summarizes the general rule of the evolution of financial system. The paper draws such a conclusion: Financial system will appear convergent in a long term, but financial systems in different countries will be varying and a single financial system will carry on inside division. Main investor behavior preference has great possibility to become a key factor affecting the evolution of financial system. The evolution of financial system in East Asia will be inside evolution of bank-oriented financial system.Chapter 4 deals with the financial reform in Japan under positive financial crisis. The paper reviews and summarizes the forming process and main characters of the financial system in Japan, points out that the financial system in Japan is due to the special historical conditions and proposes that main bank system is the base of the financial system in Japan, though we don't know the future trend of main bank system. The paper analyzes that the financial reform in Japan has undergone the process from gradualism to big bang. Due to the opposing from the interest group and the delay from the government, the early reform has once faced the great danger without gaining anticipated effects. But through all kinds of ways of law, market and administration, non performing assets decreased greatly in March, 2005. In the course, the structure of financial system has kept stable and bank is the core of financial system in Japan.Chapter 5 discusses the financial reform in Korea under negative financial crisis. The paper reviews and summarizes the forming process and main characters of the financial system in Korea, analyzes the experience and lessons of the financial reform in Korea and points out that government oriented financial reform is the second best. The research finds that with the development of the reform, the reform will face a dilemma between deepening the reform and protecting chaebols. At the same time, the research indicates that bank has still played the main role in financial system in Korea.Chapter 6 is about the logic of financial system in China. Compared with Japan and Korea, the paper finds that bank reform is the core of the transition of financialsystem in China. The paper has deduced the logic of the transition of financial system in China through a simple model. It puts forward that private capital might become innovative agents in the transition of financial system in China. The author proposes that financial reform in China will follow the mode of "gradualism", but in some degree some measures of "big bang" should be adopted. Finally, the paper analyzes where the shoe pinches in the current transition of financial system in China: decentralization, law, and constitution.Chapter 7 discusses that financial system in China should be simultaneously open to foreign capitals and native private capitals. As far as the realistic problem of bank reform in China, there are two representative views mainly: Wang Yijiang and Tian Guoqiang emphasize preferential opening to foreign capitals; Xu Dianqing accentuate that native private financial institution must be developed firstly. This paper uses a simple model of vying each other to expound an inherent logic that financial system in China should simultaneously open to foreign capitals and native private capitals. Based on this, the paper evaluates and analyzes China Government's choice of inclining to preferential opening to foreign capitals by importing foreign strategy investors in the course of bank reform. The paper points out that some questions might exist by doing this. The reform of rural cooperative credit society is a critical opportunity for the operation that financial system in China is open to native private capitals.Chapter 8 is the case analysis. The paper describes the main agent-private owned finance in the transition of financial system in China and analyzes the fact through the case of Wenzhou and Taizhou. The paper points out that private owned finance is an ideal arrangement for native private capitals to take part in the transition of financial system in China. The current private owned finance is usually the equilibrium of the game between central government and local government, so it will face great pressure of the reform. The paper analyzes the practice of private owned finance in China from the past to the trend, summarizes the experience and problems, and compares three different development modes: society bank, financial group and loan agency corporation and proposes the general thoughts of the innovations of private owned finance in China.The last is the conclusion and the summaries of related policy advices.