Regulating And Deepening On Finance Maturity

This paper reviews and discusses the pace and direction of the transformation of China's formerly socialist economy into market economy. It focuses on the relationship between governmental regulation and finance maturity aiming at finance deepening. Transformation of finance has become a key problem for transition economy.Under market economy, economy development is highly correlated with financial sector. But the emergence, development and economic implications of different financial structures are not well understood. This paper analyses the function of governmental regulation of finance maturity. Finance has become the pivot for modern market economy. So studies on China's financial reform become an important problem for economists. How to get the support from finance? To begin with the feature of transition economies, the functions and behaviours of government become important study object for economists. In this paper, we analyses the governmental behaviours in finance maturity and effects on finance maturity from governmental choice. There is nowadays a wide consensus among economists that finance should be independent, especially the central bank. External and internal exigencies are forcing governments to tackle with new resolve the twin challenges of state capital restructuring and financial sector reform.The improvement of financial efficiency is always realized in special arrangement on financial system. The arrangement on financial system depends on the goal of development and on what level does economy foot.Growth is a problem that is being faced by all countries, whatever developed or developing countries and planning or marketing economy. But development is a special problem for undeveloped and transitional countries. Neither growth nor development can realize without support from finance. Finance maturity is specifically defined for the process in which financial system adjusts itself according to the requirement from economic growth and development.Growth and development can be considered as two sides of maturity seeing biologically. The process of finance maturity unifies with the process of transition.Study on finance maturity includes two parts: (1) financial growth that mainly focuses on the data and scale; (2) financial development that mainly focuses on the function and efficiency. Definition of finance maturity will help us to understand the process of transition from planning economy to market economy and financial reform.By focusing on the functions of money, monetary policy, financial intermediation and governmental regulation, this paper points out the lack of credibility of slow reforms as well as the danger of a radical big-bang approach, and recommends a gradual transition under governmental regulation.Regulation is a institutional environment to finance maturity. The external regulation is important to finance maturity, because it directly affects the organizational cost and transaction cost of finance system, and decides the space and boundary of finance maturity.