Trust Economic Research

Trust is based on the trustful commission, which refers to the behavior that the settlors transfer the property to the trustees who will manage and deal with the property for the benefit of beneficiaries. Through the trust activities, the people who don't have the ability or aren't willing to manage the property by themselves may transfer the property to the trustees who have the ability to manage the property and make order to the use of a part or all of the assets and the income for the benefit of the beneficiaries. Trust is a flexible free method of administering property.The modern Trust comes of the U.K and is the main method of administering property in the common law states. The Trust principles and institutions can be used in many fields, such as from the management of family assets to public assets, from various private pensions to mutual and charitable foundations, from the management of property to financial investment. Mainly from the point of neo-institutional economics, this paper expounds how to collocate the trust property right, reduce the transaction cost and improve the Trust efficiency and how to ensure that the trustees could manage and deal with the trust assets according to the settlors' wills in the Trust activities and discusses the questions of the trustees' prompting and the rational designs of the Trust contracts when Business Trust is becoming the mainstream of the Trust development, which is good for the indraught of the Trust system and the development of the Trust industry.This paper includes 7 chapters. Chapter 1 is the introduction which introduces the background of choosing this topic, the significance of this reach, the theoretical basic, the methods of the research, and the logical train of thought, the central thought and the theory structure of the whole paper. The development of the Business Trust, especially the Finance Trust, makes the Trust together with the corporate system be the two important financing systems. Except for the connotations of the social ethics, the philosophy and the religions, the Trust is endued with economic factors, which gives the economic analysis of the Trust more practical significances. The development of neo-institutional economics offers powerful instruments for the economic researches. Especially, the use of the efficient conception of the economics of the foundation of the law and the economics makes the Trust researches not only localize in the traditional area of the law and not seek justice and justness purely but also take the transaction cost as the tool, we can analyze how to balance the rights and the obligations between the trustees and the settlers reasonably according to the property right theories, which makes the Trust activity more effective.Trust is the base of the Trust. Chapter 2 starts from trust with the keystone to introduce the beginning and the functions from the economic aspect. Based on trust, it introduces the concept of Trust and analyses the inscapes, characters of Trust. And the relationship between Trust and principal-agent is analyzed in Chapter 5——the base of Trust design, which is also the premise to use the principal-agent theory for reference. The basic function of Trust is financial management which is just financing. It can stretch to other functions such as financing, communication, economic relationship cooperation, trust, information and inquiry offering and social investment. At last, sum up the tendency of historical evolvement, which is the processes of from Testamentary Trust to Contractual Trust——from the death to life, from Other-benefited Trust to Self-benefited Trust——from altruism to egoism, from Civil Trust to Business Trust——from obligation to paying, from Property Trust to Financial Trust——from many faceted to specialization. Just based on these evolvements, the economic Trust analysis is meaningful. The Trust is a multilateral economic relationship whose core is the asset. The trustees, settlers and beneficiaries are the main relative participants. Though the relationship of the Trust trade is special, we can't avoid the puzzle of the transaction cost. Beginning with the definition of the Trust transaction, In Chapter 3, the paper analyses the transaction cost and its constitution and expounds that the existence of the transaction cost educes the emergence of the Trust system, similarly, the existence of the Trust transaction cost stimulates the people to enhance the efficiency of reducing the transaction cost, which accelerates the development of the Trust system and the spread of the Trust system in the world wide.There is a conflict with no exception to introduce the concept of Trust to the civil law states for the different definitions of property rights. As the foundation stone of property law, the property ownership right has different definitions between the common law states and civil law states. There is a perfect explanation of property ownership in parallel of the common law and rules of equity which is the origin of Trust. But it's difficult to explain the trust relationship of right allocation and independence of property. Chapter 4 applies the concept of property ownership in modern economics to analysis the trust property ownership and the characters of trust property which weakens the concept of ownership. So it solves the baffle of trust property ownership in civil law states, and makes the relationship of right between relevant persons clearer.The economics calls the transactions of the asymmetrical information the principal-agent relationships collectively. The principal-agent theory is based on this kind of definition precisely. Obviously, the Trust belongs to the principal-agent relationship of the economics. The multi-stage model and the multi-duty model of the principal-agent theory depict the trust relationships reasonably. Chapter 5 which is based on the principal-agent theory analyses the prompting of the trust relationships, and emphasized the recessive promoting, the fixed commission system, ownership-first arrangement and the trustees' duty of the trust relationships and so on. At the same time, it also certifies the rationality of the Trust system which is evolved from the long-term development, which is based on the economics.Economic development is an eternal bewilderment in the developing history of human beings. Economists in different eras probe the real power of economic development continuously. By their efforts, capital accumulation theory, technical deciding theory, human resource theory and so on are made out. But institutional economics believes that both capital and human resource accumulation and technical development are only the appearance of economic development but not the reason. In the real world with dealing cost, institution is very important. The obligation restrictions are different in different institution's arrangements, so the difference of dealing costs makes the efficiencies much more different. Chapter 6 clarifies the importance of institution to economic development through the analysis of traditional economic development theory and analyses the Trust institution performance by the concept of institutional efficiency.The last chapter thinks back about the cause of flexuous development of our country's Trust industry and analyses the limitations in the Trust institution through the retrospect of history of Trust institution in our country, analyses the status in quo of the Trust need, summarizes the experiences and probes the new direction for the development of our country's Trust industry.Applied the normal formulas of neo-institutional economics all through, the paper does some explanations and analyses to Trust activities to enrich the connotation of Trust theory. Trust economic research is the excellent combination of Trust activities and economic development on the aspects of both time and space. In the aspect of time, the Trust activities evolvement cooperates with the birth of neo-institutional economics very well; in the aspect of space, trust property ownership is the best comment of ownership theory in neo-institutional economics. Indeed, Trust economic research is just a branch of Trust theory, and the parts which lay in the fields of sociology, ethnics, law and so on are developing continuously. Even in the era of economic empire, economy also can't solve all the Trust problems. The use of Trust in human society development is enlarging incessantly and there will be no limitation to the aim of the foundation of Trust just as there is no limitation of the legists' imagination.