On Financial Innovation And Its Risk-Controling Mechanism

Since the 1950' s, Financing innovation, western developed countries as the representative, has began risen and gradually become a tide to spread around the world, pushed forward by the continual advance of science and technology. New techniques in the financial fields have been adopted extensively, new markets have formed constantly and new instruments,new transactions and new services come thick and fast .All this has make western financing service and even world financial service change comprehensive and profoundly and formed a largescale and all-round financial revolution.Supply from financial innovation, and that scientific and technical advances support financial innovation technical. For the side of demand, the main reason is that the financial development and market change make objects of service produce the demand to the financial innovation .Since the end of the fiftieth the financial innovation has been characterized by electronization ,new-typization, diversification and continuation and the developing tread to the new century is securitization, integration and development of outside-reporting form business.As a two-edged sword,not only did financial innovation break through the control and the yoke which scientific & technical achievements, created many original financial instruments & transaction which could meet different demand of home and abroad fund suppliers and demanders, expanded market contents, raised the operating efficiency of financial institutions and market, strengthen financial in filtration force and driving force on economy, bufalso innovated traditional professional activities and management style.Financial innovation can either be equated with great changes, or be looked upon as the process, in which innovative main body recombine financial facts.The financial innovation we concern about commonly mainly refer to the second implication including financial instrument innovation, financial technical innovation, financial market innovation, and financial system innovation. The opinions about generative mechanism,vary in theoretical circle, for example, Technical Advance, Monetary Factors, Wealth Increase, Limilation and Enouncement, System Factors, Avoidance and Control, Demand Advance,Structure Changes, Transaction Cost,ect.,all stresses certain factor of the cause that financial innovation produces. In fact,analyzed economically, its cause of formation is facilitated jointly by varied macro or micro factors from two side-demand and supply. It is the main reason, viewing from the side of supply, that the main body of financial innovation chase profit and escape the control from financial authorities, and that increasingly fierce competition among financial institutions greatly stimulate country confinement of financial activities,obscured the bounds of different financial institutions,aggravated the competition of financial trade, formed strong pressure to loosen control,changed financial structure of general quantity re-shaped financial operating system, raised severe challage to monetary policy macroeconomic regulation and financial supervision.In a word,financial innovation brought some income for the innovation main body and society,and in the same time some new risk,that is the risks of financial innovation.An accompanying object, the risk of financial innovation is a kind of uncertainty confronted with by innovation main body in the process of innovation or use after innovation. The risks can be divided into initial risk and breeding risk according to different stage.Initial risk is uncertainty innovation main body confronted with in the process of financial innovation. It is main body of financial innovation is relatively a little comparing to the future cost .On the contrary, breeding risk of financial institution, or systems and society, which is produced in the process of use of financial innovation, commonly own considerable influential scope and power.Financial innovation,esp financial instruments' innovation, makes the risk of financial innovation from...