The Theoretical Logic Of Bank Bankruptcy Law Perspective Of Law And Economics

Bank bankruptcy exists from the beginning of the bank system. Accordingmarket discipline, those banks which are managed badly should be eliminated.However, due to some specific characteristics of bank, the problem of bankinsolvency are regulated and constrained by many factors. Inspecting the developmentof banking practice in China, the fact that some of the financial institutions havealready fit the conditions of bankruptcy can be easily found. But the absence of awell-established bank bankruptcy system stop those institutions from entering thebankruptcy proceeding. In order to maintain the financial stability, the government hasto spend lots of financial resource. Meanwhile, the financial condition of those bankskeep deteriorating bank system is threatening the benefits of interest party. Thus, awell-establishment banking bankruptcy legal system with specifically nature carefullyconsidered has to be built imminently. Which law mode of banking insolvency adaptsto the financial reform and transition in the current; which logic of legislation shouldbe adhering to? What’re the specific norms of legal structure, principles, proceduresand effect? The answer to these questions has not yet found. And argument existsbetween the theory and practice. So the theoretically research is essential, so as thepractical one. This paper does a theoretical logic research into these questionsaccording to the analysis of concept, analysis of law and economics, analysis ofcomparison, while fully using resource from various subjects.The five chapters are:Chapter one: general principles of bank bankruptcy concept and rules. Bank is apublic and social industry, which provides public goods. In this paper, the concept ofbank includes commercial bank, cooperative bank and credit unions. Banking creates mobility with keeping the unbalanced match, which could cause a special risk ofrunning. As being an important characteristic of banking business, running happenseasily. This vulnerable characteristic causes the banking crisis. In this regard, theGovernment should establish a sound law, especially on the banking insolvency, inorder to resist risk banking supervisory responsibility. There are two kinds ofinsolvency law generally. One is to establish a separated law; the other is to letbanking insolvency regulated within the common law. In the field of bankinginsolvency, the administrative power of the supervising bureau seems larger. Depositprotecting agencies also play important roles in some of the law field meanwhile onduty of compensating.Chapter two: the jurisprudence basis for bank bankruptcy law.Two kinds ofcharacteristics in interest conflict during bank bankruptcy are, the wide range of effectand the systematic effects which could leads a risk. The bank bankruptcy law aims toprotect the public interest while balancing the interest conflict. Bank bankruptcy lawscombine the private law with economic law, which means having both characteristicsof self-managing and being regulated. The main authorities in banking insolvency arebanking supervision bureau and the court. The theory of financial supervisionlegitimates supervising. The administrative power should be regulated appropriatelyin banking insolvency.Chapter Three: Approach and design of bank bankruptcy law based on thecharacteristic of insolvency logic. The fundamental question is to balance the interestconflict between creditors and debtors. Regarding of the efficiency in advance, bankbankruptcy law should be defined as an incentive system. Afterword, bank bankruptcylaw should provide a issue-solving system in low cost. Mobility, running, systemattack, regulation failure, risk transfer, black-box operation and asset runs are theexpression of the characteristic in bank bankruptcy law. So, multiple regulationsshould be established.Chapter four: Guiding principles of the bank bankruptcy law construction. Inregard of the characteristic of bank, some guiding principle should be confirmed. Initially, bank supervising bureau should timely intervention, in order to prevent thefinancial risk. Secondly, a creditor-protecting bankruptcy system should beestablished. Thirdly, liquidation, mergers and acquisitions, purchase and assumptionagreement, nationalization should be the major intervening method to solve thebanking problems. Finally, Design of bank bankruptcy law should express thecharacteristic while keep supervision from arbitrage, as well as coordinating withcommon bankruptcy.Chapter five: Construction of Chinese bank bankruptcy system and institution.Demands of independence and perfection within Bankruptcy become urgentaccording to current legislation and practice. High saving rate, non-performing loans,excess liquidity, capital adequacy ratio can banking crisis. According to my research,legislative suggestion and conclusions are: establishing independent bankinginsolvency law, protecting banking crisis is the fundamental aim of bankinginsolvency legislation. The standard to enter the bankruptcy procedure should beclarified. Empower the bank supervision bureau to intervene in advance. Combinepre-bankruptcy intervention and judicial restructuring legitimately. Establishliquidation protecting system. Power distribution and laboring cooperation system offinancial safety participants should be ameliorated.