Study On Financial Innovation Of Modern Commercial Bank

Beginning with the theory of innovation, the paper studies the Financial Innovation (FI) of the commercial bank. During the process of analysis, it applies the theories internal and external of FI to the practice of Chinese commercial banks, and tries to find out the difference of the FI between our commercial banks and the ones in the developed countries, then explains the reasons of this difference .On the base of the experience in west countries and Chinese national conditions, it puts forward some policies and suggestions to promote the FI of the commercial bank in our country . So in order to study the FI of our commercial banks deeply, this dissertation will be divided into six parts :the theories, the reasons, the effect, the restricting factors, the suggestions and the prospect of the FI .First of all, this Master thesis states the Theory of Innovation, which was originally created by Schumpeter J.A.. Afterwards, many financial scientists apply the theory of innovation to the finance field, and then built many theories of FI . The paper introduces some theories concerning the motive of the FI, which are pretty influential. These theories explain the reasons of the commercial bank in west countries from different aspects .The purpose of the analysis of the theories is to direct our commercial banks' practice of the FI.Though our banks have achieved glorious accomplishment during the course of the reform and opening- up, there exist so many serious problems which will cause disadvantages for their development in future . In order to strengthen the competitive power, the most effective means is to innovate wholly .The FI is also the most realistic choice for our commercial banks to adapt to variable conditions and various financial demands .It points out the difference between Chinese banks and the west ones by comparison .The FI will bring profound influence on finance because of its large scale and wide scope. On the one hand, the Financial Innovation increases financial products, improves customer satisfaction and efficiency of financial market, and promotes the economy development. On the other hand, the FI impacts the stability of financial system when it brings benefit for financial institution. The purpose here is to makeus know it better, and play positive role and eliminate its negative influence.But there are many factors, which restrict the innovation of our commercial banks because of short development process and the obstacles of system and technology. Among of all these factors, relatively lagging financial supervision institution, unreasonable Property Rights arrangement system, imperfection conditions and the lack of financial talents are the most important, which are the immediate causes of the low level and small scale of ourcommercial banks' FI. This part also builds the base of the following suggestions.It puts forward some policies and suggestions to promote the FI of the commercial banks in our country . It thinks the commercial banks should change thought at first, and innovate from product, which is the core, technology, which is the base, organization and management, which is the guarantee. At the same time, the financial supervisor also should improve supervision in order tomaintain financial safety .The thing the financial supervisor should to do is perfect supervision to standardize and lead the commercial bank' s FI. Thus, the double aims of financial efficiency and safety can be realized. In addition, the pertinent reform should be promoted to create perfect conditions for our Commercial banks.Quickly developing economy, improving market institution have created better conditions for our commercial banks. With the trend of global economy, free finance, the Financial Integrated Operation and advanced technology, our commercial banks will cater for a new following climax of innovation, which will promote the development of our economy and finance greatly.