An Approach To The Cause Of The Formation Of Financial Market

The purpose of this article is to discuss the cause and impetus to the formation of financial market. Then it is engaged in the mechanism of financial market to expedite economic development. After the introduction of the concept,character,structure and function of financial market,the paper involves the history of financial market on principle of "from history and into history" in order to acquire some information. It is guessed on basis of the above references that financial market was born from division of labor and,conversely,can promote division of labor. Detailedly speaking,financial market can reduce social transaction cost,make division of labor profitable,accelerate social production rate,speed economic development and increase average income per person. To embody the above supposals,prove them by means of mathematical model,replay the historical trace of the formation of financial market and reveal the mechanism of financial market to expedite economic development - these are the cores of this article. In the end,the necessary condition for an effective financial market is elicited,which is also necessary for financial reform of China.The theoretical meaning of this article is to discuss the cause and the process of the formation of financial market and analyze the function and the mechanism of financial market to expedite economic development by means of infra-marginal analysis of new classical economics from the angle of economic organization. Contrast to traditional economics,it is considered the most essential impetus to the formation of financial market and the mechanism of financial market to expedite social economic development to reduce social transaction cost,promote division of labor,accelerate social production rate,speed economic development and increase average income per person. The special practical meaning of this article is as follows. Based on thenecessary conditions for a effective financial market,it is pointed out that the so-called financial market under the plan economy which was established by the interruption of government is unlikely to reduce social transaction cost,promote division of labor,accelerate social production rate,speed economic development and increase average income per person,therefore,the original function of financial market can not be achieved. Eventually,some proposals are deduced so as to do something helpful to the financial reform of china.