| In June 2004, Basel Committee on Banking Supervision announced its final version of New Capital Accord (namely International Convergence of Capital Measurement and Capital Standards: A Revised Framework) on the official website of Bank for International Settlements (BIS). Besides single capital requirements, this New Accord adds supervising authorities'monitoring and market discipline, which constitute a joined three-party discipline. Market discipline, together with the first pillar (minimum capital requirements) and the second pillar (supervising authorities'monitoring), has become to jointly support the steady banking industry.In CBRC's consulting response to the third draft of New Capital Accords of as early as 2003, China Banking Regulation Commission (CBRC) put,"During the beginning years of New Accord implemented by Group-10 since the end of 2006, we will still continue to implement the old Accord of 1988. In order to increase the level of capital monitoring, however, we have made adjustments to the existing capital-concerned provisions, making the contents of the second and third pillar involved". Chinese regulators have realized that, developed market economies'best practices in modern financial supervision and regulation showed in this New Accord, including the successful experiences obtained in market discipline, shall be utilized to facilitate our country's financial reform and development in an all-round way. Therefore, the research on this New Accord should not be neglected just because of China's provisional non-implementation, instead shall be emphasized both theoretically and practically. While the reform and development of Chinese banking and its regulation have made significant achievements for the past dozen or more years, some deep-rooted problems have been exposed, which include such difficulties faced with regulators as low-quality banking assets, less-improved operating mechanism, lagging monitoring methods and to-be-improved regulating effects, etc.. Banking regulation's market mean and administrative mean, as invisible hand and visible hand respectively, have their respective comparative advantages, whose relationship are so complex and compact. It has been theoretically and practically testified that, market discipline owning its special merits relative to official regulation with the aid of market discipline can be a shortcut to resolve above-mentioned issues and increase monitoring performance. But we should not be so optimistic toward China's banking market discipline. Then whether the researchers on official regulation shall facilitate and how to facilitate the improvement of market discipline mechanism will have of tremendous and realistic significance for China's banking reform and development.The theory circle has made a great deal of explorations into the issues related with market discipline discussion. The prevailing viewpoint holds that the market discipline against commercial banks is a kind of discipline stemmed from private sectors against commercial banks'unsteady conducts, which can be reflected through deposit market, credit market, capital market and even human resource market, and might force commercial banks to select a safer and steadier operation manner. Market discipline has some distinct advantages in increasing monitoring performance, including being conductive to reduce the regulation lags, constrain moral hazard and increase the sensitivity of monitoring to financial innovation as a whole, etc.. The theoretical development has irritated official concerns about banking market discipline, which is also reflected in policy actions. The regulating system of emerging market countries, excluding developed countries, have made an attempt to improve and promote the mechanism of market discipline, and obtained satisfactory results.This thesis is hoping to investigate and study how market discipline can obscure dynamic support and coordination from regulators theoretically and practically by discussing the theories relating to official regulation and market discipline, analyzing the practices of developed and developing countries and the reality of China banking and its regulation. Especially the exploration and estimation to regulators promoting the improvement of China banking market discipline, can make up for domestic insufficient research in this field and further provide the reference theoretical and practical basis for systematic policy making. Due to insufficient information disclosure, the lack of qualified suppliers for banking information and the imperfection of supporting basic system, the validity of market discipline and the sound development of banking regulation has been impeded and influenced, which leading to the accumulation of China banking operating risks. Starting with the research on certain basic issues relating market discipline of commercial banks, this thesis makes an analysis and judgment of the reality of market discipline in China, makes an international comparison of market discipline, and explores the reference significance for China; it, also beginning with the views of market-enhancing and regulation boundary, puts forward the theoretical basis for official regulators'inescapable responsibility to improve the mechanism of market discipline, and advances several strategies to perfect the mechanism of Chinese banking market discipline from the perspective of regulators and their functions. Policy advices are emphasized on information disclosure (inclined to compulsory information disclosure), training qualified market participants (or steering market participants to take reasonable actions) and perfecting the external supportive environment, which are realistic issues this thesis exactly deals with. In addition, this thesis wants to install the third pillar– market discipline– into China's financial background by jointly analyzing such financial system and banking reforms as the market-oriented interest rate reform, state-owned commercial banks reform and the reform of deposit insurance system which are implemented now and will be implemented by China, and study the correlations between them, hoping to realize an overall sound interaction between banking development and regulation.Concerning how to perfect the market discipline mechanism, this thesis follows a theoretical analysis framework: the mechanism of qualified information disclosure, so as to ensure that the criteria of information supply shall be sufficient to hold up information users'effective discipline conducts, for example, accurate, sufficient and on-time; qualified market participants, including information suppliers– commercial banks, information receivers– depositors, shareholders, bondholders, employees and other banking institutions as counter-parties; external supportive systems and infrastructures– deposit insurance system, subordinated bond market, market exit mechanism and market-oriented interest rate, etc.; the institution supplying public regulation and the entity promoting the perfection of discipline mechanism– official regulator. The situation of commercial banking market discipline is mutually contributed to by the foresaid three factors, but whether these factors are qualified or not and whether the mechanism of market discipline can be improved or not shall be dependent on the official regulators'conducts to a more extent. In nowadays China, regulators can play a more important role. Except the introduction, this thesis consists of four sections, that is, eight chapters in total. The first section discusses basic theoretical issues of market discipline and official regulation, which constitute Chapter One. The second section discusses realistic research issues of market discipline, which are mainly embodied in Chapter Two and Chapter Three, including comparative draw-on of international situations, review of the historic progress of China's market discipline and judgment of the current condition of China's market discipline. The third section of this thesis discusses the theoretical framework, factor analysis and policy advices concerned about regulators'perfecting the mechanism of market discipline, which is comprised by Chapter Four, Five, Six and Seven. Chapter Eight is the ending of this thesis.Introduction mainly tells title-selecting reasons, research background, outlines of literatures, studying methods and main viewpoints, etc.Chapter One discusses the theoretical basis, historic progress and interaction of market discipline and official regulation. By discussing such theoretical basis of market discipline and official regulation and reviewing their development, especially as for the theories questioning the validity of official regulation, a necessary conclusion can be drawn that market discipline and official regulation shall obviously complement with each other, and connecting these two and coordinating with and stimulating each other will undoubtedly be a more effective and reliable regulating manner.Chapter Two deals with international comparison, which together with its reference meaning includes: banking market discipline in such countries as New Zealand, Argentina, United States and India. This Chapter mainly analyzes information disclosure system and corresponding supportive conditions for market discipline, for example, mature training for market participants, external audit and rating, subordinated bond market and deposit insurance system. Through the comparison and reference, we can know that to perfect relative external environments and supportive measures is a necessary condition to ensure market discipline to play an effective role and ensure regulators to play their parts in this mechanism. Meanwhile, we are reminded that there is no existing or unified model to perfect market discipline and the actual situation of our respective countries shall be kept with.Chapter Three makes an analysis and a judgment of Chinese commercial banks'market discipline. Prior to the analysis, the review of system development marked by different events is divided into four stages of Chinese regulators'identifying and promoting market discipline, which shows the process regulators phase in the emphasis on market-oriented regulation. There are at least two requirements to play market discipline's role: 1) market participants shall be equipped with adequate information, or else they can not know reliable financial institutions from unreliable ones; 2) market participant shall be qualified ones, that is, owning required financial knowledge and strong risk consciousness, being able to reasonably respond to information and make appropriate decisions. By analyzing information supply and the situation of information suppliers and users, the author forms a preliminary and less optimistic judgment of the conditions of Chinese banking market discipline. Based on this judgment, is there any market discipline in Chinese banking? What about its patterns and intensity if any? The author finally comes to a conclusion by studying three current typical cases and testing related data. Faced with such weak-effect and always-twisted discipline situation, this author analyzes the necessity and urgency of perfecting market discipline. As for the danger due to lacking market discipline, a case study on Japan will be referred for further justification.Chapter Four puts forward the theoretical basis and framework for locating Chinese regulators of market discipline mechanism. This Chapter continues to further discuss and differentiate the distinct features and complex and close correlation of official regulation and market discipline. For example, besides the complementation of the two, market discipline can be helpful to supervise the prevention of regulators'abuse or non-conducts. At the same time, this author discusses the boundary of official regulation by virtue of the cost-benefit analysis, explains the requirements that government functions in transition economies shall be more located at promoting or supplementing market forces through the market-enhancing view. Owing to inadequate conducts in perfecting the mechanism of market discipline, China's official regulators shall undertake their responsibility during the course of assisting the market to perfect the discipline mechanism, so as to make their administrative conducts approach the optimal regulating boundary and increase the efficiency of regulation. The analysis framework which the perfection of market discipline mechanism adheres to involves four factors: the mechanism of effective information disclosure, qualified market participants, supportive systems and infrastructures and official regulators (the theoretical issues relating to such factors will be detailed in the following three chapters respectively).Chapter Five focuses on demonstration of the established information supply manner in China– compulsory-disclosure-oriented. Banks may select disclosure policies for many reasons. Capital market transaction hypothesis together with securities compensation hypothesis and the hypothesis of business controlling competition illustrates possible motives for voluntary disclosure from different perspectives, but their common starting point is based on balancing cost and benefit, that is, only when the banks (senior management) thinks the benefit derived from information disclosure is more than the cost incurred, they can voluntarily disclose information. However, these hypothesizes'being tenable shall depend on their particular internal or external conditions. When combined with the analysis of China's reality, different conclusions can be drawn due to lacking corresponding conditions, namely the invalidity of voluntary disclosure. After confirming the compulsory-disclosure-oriented system arrangement, the boundaries and degrees of such disclosure will be another task of this Chapter.By analyzing the operating principles of market discipline mechanism, we can know that, whether this mechanism is practical and feasible and whether market discipline can play sufficient and effective role in banking supervision shall be closely correlated with whether external social environment, financial background and relative supporting measures are perfect or not, besides the compulsory-disclosure-oriented system. Chapter Six makes a theoretical discussion of regulators responsibility in such supportive aspects as optimizing the external environment, subordinated bonds and market exit, proposes certain policy advices.From a comparatively macro perspective, Chapter Seven installs the third pillar– market discipline– into China's financial background by jointly analyzing such financial system reforms as the market-oriented interest rate reform, state-owned commercial banks reform, the establishment of deposit insurance system and the perfection of regulation coordinating mechanism which are implemented now and will be implemented by China. The regulators pre-install the perfection of market discipline mechanism into the design of reform by utilizing the reform opportunity, which undoubtedly is an optimal choice with highest utility and lowest cost. Taking the progress, background and future expectation of current reforms into account, this Chapter puts forward some policy advices, so as to further enrich regulators'policy framework in perfecting the market discipline mechanism.As an ending, Chapter Eight summarizes regulators'responsibilities and measures in setting up a perfect market discipline mechanism from such following aspects as establishing compulsory banking information disclosure mechanism sponsored by the regulatory authority, developing and molding qualified market participants and building relative fundamental environment for the sufficient role-play of market discipline.This thesis makes efforts to create some possible innovation compared with domestic researches of its kind, which are mainly embodied in the following aspects: research view, analysis method and research finding.1. This thesis studies on the theoretical and practical relationship of banking market discipline and official regulation from the perspectives of theoretical basis, historic progress and their own features. Economics of Regulation, as macro basic theory, explains the reasons of implementing official regulations from various aspects. However, the mechanism of market discipline is more related to financial order problems from the middle-view and micro-view. This thesis analyses and differentiates the relationship, which offers reference for how invisible and visible hands complement each other and pursue common development, and ensure banking stable running and guarantee the interests of market participants, thus deepening the theoretical and practical correlation between official regulation and market discipline.2. The thesis makes a comparatively comprehensive estimation of forming conditions and current situation of Chinese banking market discipline from the perspectives of reason and representation. Firstly, it analyzes on information disclosure, market participant and fundamental environment, namely lacking of accurate, sufficient and on-time information disclosure. As market participants are concerned, the discipline authority is devoid of the motive and cognition capacity of supervision discipline and banking institutions can not respond well to the market. External supportive macro- and middle-view financial infrastructures are lagging. By subsequently illustrating and justifying data positive analysis and typical cases further, a conclusion can be drawn: there exists a weak-effect mechanism of market discipline in China's banking, and always in twisted manner due to insufficient forming conditions.3. The thesis applies the theory of regulation boundary and market-enhancing view to make a theoretical research on why official regulators want to perfect the mechanism of market discipline. Through analyzing both theories, a common conclusion can be obtained: the cost-benefit of China's regulation is unsatisfactory owing to official regulators'inadequate conducts in perfecting the mechanism of market discipline. Therefore, in order to increase the regulating efficiency and make their administrative conducts approach the optimal regulating boundary, official regulation shall resolve the problem of inadequate conducts and undertake their responsibility during the course of assisting the market to perfect the discipline mechanism.4. The thesis makes a targeted study on how official regulation promotes the improvement of the mechanism of market discipline, and puts forward some advices on policy framework applicable to Chinese banking. Domestic existing researches just focus on the related banks'own liability for information disclosure, while relative liability of regulators is not or less pertained, or systematically elaborated. The author firstly analyzes and proposes that regulators shall establish the responsibility for compulsory information disclosure and again installs the third pillar into China's financial background, jointly analyzing such financial system and banking reforms as the market-oriented interest rate reform, setting up banking exist mechanism, reform of commercial banks corporate governance and building deposit insurance system which are implemented now and will be implemented by China, and studies the correlations between them, hoping to realize an overall sound interaction between banking development and regulation.
|
PDF Full Text Request