Analyze Financial Innovation Process

In modern Market Economy, banking and finance is becoming more and more important. Financial innovation, with its great-applied force, infiltration and driving force, has been an important factor and a major herald to the economic development. J·A·Schumpeter, the famous economist, put forward the innovation theory in 1912, with which he had explained economic cycle and social transition. After that, some western scholars began to put the innovation theory into financial research, and brought about the concept of financial innovation. They wrote a lot to argue about the reasons, the advantages and the disadvantages of financial innovation, and gave the corresponding countermeasures. The Chinese scholars began to study financial innovation in the 1980s. With the establishment of the Socialist Market Economy and the development of the Reform and Opening Policy, financial innovation in China is inevitable to develop more smoothly and to play a significant role in the financial reform and financial development. Innovation practice should be based on scientific theories, but the research on financial innovation in our country is still at its starting stage, and there is almost no one that has put the financial innovation process forward. As a result, it's urgent that we carry out systematic and serious research right now.This article, following the Marxist financial theories and the Socialist Market Economy theory, consulting the financial innovation theories in western countries, combining canonical research anddemonstrative analysis, tries to analyze the financial innovation process, namely analyzing the cost and profit, the pervasion and the macro-effect of financial innovation comprehensively and systematically. By analyzing the cost and income of financial innovation, the producers can decide to practice financial innovation or not. The pervasion process studies the process of passing and using the financial innovation, while the macro-effect analysis assesses the effect of financial innovation. Resorting to models and graphs, this article has studied the producing, the use and the influence of financial innovation. Based on China's reality of financial innovation, this article gives the corresponding countermeasures, hoping to provide some beneficial suggestions to our financial innovation and reform.