The Analysis Of The Role Of The Government In The Process Of Financial Liberalization

Financial Liberalization is a prevail theme in the field of world economy and a broad theme concerning extensive background of the history of economy and economic thoughts. Although this subject is relatively young as an academic field, the topics that it touches upon almost contain the whole themes throughout the history of the economic thoughts. It is for this reason that it inspires deep interests among researchers all over the world. A lot of books and lectures about financial liberalization emerged in endlessly among the learning group; meanwhile, the fact that global financial liberalization led to both rapid economic growth and severe financial and economic crises forces the governments and scholars to seek an optimal path to financial and economic liberalization, which will promote the economic progress and structural transition at the lowest cost of financial risks. My work focuses on the financial liberalization in under-developed countries and economies in transition from traditional planned economy to free-market style, studying the financial repression in these countries, inspecting the process of their financial liberalization and its profits and costs, investigating the role of government activities in the process of financial liberalization and financial crises, and analyzing the path selection of financial liberalization in transition economies.The first part gets a birds-eye review of the financial liberalization from the perspectives of history of economic thoughts and economy. The study on financial liberalization can not be separated from the everlasting debate between Economic Liberalism and State Interventionism in history of economic thoughts, and to some extent, the heated argument about the advantages and disadvantages of financial liberalization is actually the logical continuation of this debate in the field of modern finance. By investigating the thoughts of classical economic liberalists in the history, we have got much valuable enlightenment on the vicissitudes of economic liberalism and the relationship between freedom and the state, which has important implication on the role of state in financial control in the process of financial liberalization. Meanwhile, the history of financial liberalization is actually the history of the government behavior adjustment in the financial control, and the process in which the style and scope changes in government regulation. In many under-developed countries and economies in transition, the financial liberalization is state dominated, and the discussion about the financial deregulation is logically connected with the role of government, with the public choice in decision-making. Institutional economics provides us a valuable brand new visual angle to examine the role of financial institution, the dynamic characters of financial liberalization and the path-dependence in the institutional transition of financial system. This lecture will take advantage of the analytical paradigm of institutional economics to study the process of the financial liberalization and its institutional condition. Transition economics is a new branch of economics rising with the historical transition from planed economy to market economy in former socialist states. For the fact Chinese economic is in the process of transition, the study on financial liberalization in China must be combined with the research achievements in transitional economics and development economics. In the first part, I try to introduce the methodology and analytical framework of this lecture, and the detailed analysis of economic thoughts in the history will help to further study in other parts.The second part is an attempt to investigate the financial system in an institutional economics framework. From the perspective of institutional economics, financial markets represent series of institutional arrangements that have various functions containing information transmission, providing encouragement and income distribution. The financial repression in many under-dev...