Research On China's Financial Moral Hazard During Economic Transition

The paper is based on the summing up experience and drawing lessons from international financial world and fulfilling the needs of domestic financial world. The paper is mainly on the Moral Hazard of financial institutions and staff, and subject investigated is the Financial Moral Hazard in a broad sense. The framework of the paper starts with international Moral Hazard, financial risks frontier theory and the study on models, conjunctive use of modern economic theories and study methods such as Game Theory, Information Economics Theory, New Institutional Economics and Principle– agent pattern, etc., introduces the international experience of prevention and regulation of the Financial Moral Hazard, adopts it as our own and analyzes and studies the Financial Moral Hazard in domestic financial operation systemically. The mechanism design to prevent the domestic Financial Moral Hazard is the key part in the paper. The prevention mechanism is designed from both macro and micro aspects. The two aspects are link together and interaction. It is designed to establish two"firewalls"of domestic Financial Moral Hazard during prevention transition period to achieve to ultimate goal of maintaining of financial stability and the sustained economic growth of the financial industry.The main creative part in the paper is that on the basis of the study of overseas and domestic researchers, with the combination of domestic reality, the author tries to air own views on how to prevent Financial Moral Hazard. Firstly, the paper designs two firewalls to prevent the Financial Moral Hazard. One is the micro-mechanism to prevent the Financial Moral Hazard; the other is the macro-mechanism to prevent it. Secondly,the paper establishes multi-objectives Entrust-agency game-model of operator in domestic financial Institutions. From the aspects of three independence and interdependence of three objects which are the operation objective, administration objective and the objective of meeting the preference of superiors, the paper makes a concrete analysis on the behaviors of operation agencies of domestic financial institution's operators, and brings forward policy advices for the prevention of Moral Hazard of the financial institution's operators and close to the domestic reality.Thirdly, the paper studies on the domestic Financial Moral Hazard completely and systemically. Study is forward looking to some extent.