Study On The Reform Of The Supervision System Of Financial Chinese Sector

On the problem of separate operation or mixed operation, despite of repeated arguments over the years, the practice of mature markets shows the basic trend of a one-sided, namely, not only in the countries which once insisted on the separate operation but also the countries which have the tradition of mixed operation , most of the financial institutions have been or are being modified to all-around financial groups which set the deposit and loan, securities, insurance, futures and other operations into a whole , and the powers derived this trend approximately can be attributed to two points: first, since the 1970s, with the continuous improvement of the social productive forces and the acceleration of economic globalization, the focus of economic competition has been translated to the service industries of information, communications, financial and other emerging industries from traditional industrial economy. Just in this increasingly tense atmosphere of competition, financial institutions continue to open up new battlefields in order to meet customer diversification and integration needs; Second, from point of view of cost, the financial institutions implemented mixed operation are conducive to save the transaction costs and bring with economies of scope and economies of scale. Specifically, it can more in-depth tap the value of information and more broadly share management costs, as well as more convenient and fully exert the effectiveness of credibility through the mixed operation. It can more in-depth tap the value of information and more broadly share management costs, as well as more convenient and fully exert the effectiveness of credibility through the mixed operation. In addition, because customers can obtain all required financial services from the all-around financial institutions, which made contacts between the two be more closely, thereby reducing the information asymmetry and reducing the cost for financial institutions to expand new customers.China is implementing the mixed operation step by step, which is not only the needs of economic and financial development, but also the inevitable result to meet the challenges of opening up the financial sector. On the situation of parties thinking that China implemented mixed operation of financial industry is the trend, major changes triggered by the financial crisis lead to the measures of china implementing the financial mixed operation being more cautious . But more people believe that mixed operation and financial innovation are not wrong in themselves , the key is how to strengthen supervision of financial institutions and appropriate innovation. From this point of view this article explores how to draw lessons from financial mixed operation in the developed countries, to find the mixed operation ways which are suitable to Chinese national conditions, to implement the transformation of operating system according to the situation changes, to explore Chinese suitable financial supervision model and reform path under the big background of the international financial mixed operation.This article discussed from four aspects focus on these issues:(1) Theory analysis of the development of financial mixed operation. The theory has discussed the theoretical basis and practice power of the development of financial mixed operation through a summarization and analysis on existing theoretical research production.Firstly, many scholars from different points of view have researched on the financial mixed operation. Because of the different idea and starting point of research questions, all scholars' theories and views of financial mixed operation are not exactly the same. This paper mainly summarizes and analyses circumvent type of financial innovation theory, transaction cost theory, technology-push theory and financial liberalization theory.Secondly, the main reason of emerging financial mixed operation is: financial liberalization theory and practice development; financial globalization and fierce competition among financial institutions; market demand and financial controls evading; the development of computer technology and so on.Thirdly, this paper argues that the financial mixed operation and the divided operation regardless of good or bad both are financial management models. Whether a country selects financial mixed operation, the choice should be according to their economic development level, the openning level of financial markets and the improving level of the legal system. If the foregoing conditions are all met the high level, the mixed operation can be implemented conditionally, on the contrary it should implement separate operation.(2) The financial risks research on financial mixed operation. Financial mixed operation will help spread the risks of financial markets and stabilize the finance and achieve economies of scope and scale. However, because there is no good financial regulatory, the financial mixed operation is also possible to amass risks and accelerate the spread of risks.Firstly, under the background of mixed operation, the following categories of the special risks exist: the first is the risk of diversification management and regulatory paradox; the second is the virtual risk of financial derivative product; the third is the risk raised by different cross-business; the fourth is the moral risk in mixed operation and leverage effect of financial holding company and the risk of insider trading and interest conflict; the fifth is the risk raised by mergers and acquisitions of financial institutions.Secondly, this paper argues that the financial crisis can not be attributed to the financial mixed operation. The fundamental reasons are: The first is structural imbalances of the world economy in the process of economic integration; The second is the privatization of the Federal Reserve and its structural model which rolled the Central Bank functions and regulatory functions of the Government into one resulting in their lack of financial supervision; The third is excessive financial innovation and too radical changes of financial institutions business model;The fourth is imperfect financial systems in developing countries and lack of investment channels.(3) China should implement an active, robust financial mixed operation. Chinese financial sector has experienced the development process of natural mixed—divided operation—gradual mixed operation.First, the development of financial markets and the inherent defects of divided operation, adapting to the needs of full implementation commitments of joining WTO and the diversification market demand promote China to gradually shift the mixed operation. However, China should consider the following factors in the selection of the financial business model: historical coherence of Chinese financial system development; flaw in financial property rights system, checks and balances lack of principal-agent; destruction of financial and ecological self-adjustment mechanism and the system environment of Chinese future financial development.Secondly, China should implement step-by-step mixed operation mode and select financial holding company as mixed operation organizational model, establish the operation model of multi-level financial institutions which makes financial holding company as the center,make small and medium-sized financial institutions as the base.(4) The reform of Chinese financial regulatory system. Chinese current regulatory system of separate operation is in contradiction with the mixed operation mode, the practice exposes the posteriori of Chinese financial legislation and the deficiencies in current financial supervision legal system. In response to the arrival of financial mixed operation, China should carry out reform of financial supervision system.Firstly, it should set "efficiency and security" as the goal to implement the combination of opening up protection of financial industry and state-controlled, carefully deal with the relationship between financial innovation and mixed operation, implement the changes to the principles supervision from the regulatory supervision and follow the principles of market-oriented,prudence and policy coherence, forward-looking and independent regulatory of financial supervisory agencies.Secondly, Chinese financial regulators should integrate the Banking Regulatory Commission, Insurance Regulatory Commission and the Securities Commission, to establish Financial Supervisory Commission and to make People's Bank of China completely independent to specially manage monetary policy.