Financial Innovation Of The Chinese State-owned Commercial Banks After The Entry Into The WTO

Financial innovation is the reorganization of various financial factors. It is the creative revolution and development of the financial institutions and supervisory authorities to the current financial tools and institution arrangements. Financial innovation is the motivity for the development of commercial banks, it stimulates the economic development, and makes the.financial institutions more vigorous. This essay is to find a way of financial innovation for the Chinese state-owned commercial banks after China's entry into the WTO .China's financial market must be open to the whole world soon after the entry into WTO, and foreign banks will be squeezing into China for the new market, implying unprecedented opportunities and challenges for Chinese state-owned commercial banks. On one hand, the state-owned banks will have a better environment, making it possible for them to become international financial supermarket, through their own effort of reforming and innovating. On the other hand, their market quota may decline, as well as customers, avenues and even manpower. Opportunity and challenge are like twins, they are always together. Chinese banks must face these impacts and try their best to innovate and develop.Since China's Reform, the state-owned banks have made some progress. But there are still difference between their management and innovation condition and modern commercial banks'. Insufficient ability of making profit, unstandardized management, low efficiency of innovating and unbalancing innovation are the problems haunting the banks who are in the process of changing systems. This essaywill demonstrate the facts of financial innovation achievements and underachievement by the means of practical analyze, making it clear that the need of innovation and development are urgent and practical. And it will be pointed out that financial innovation is one of the most important way to develop the state-owned banks' core competence, that is, during the transition period of WTO, they must develop their advantages, and at the same time, make up their disadvantages. They must pursue innovation on ideology, regulations, management and business, insuring their success in the future competition.This essay's emphasis is on how to innovate for the state-owned commercial banks. On the research of foreign banks' innovation and domestic banks practice, the author will expound the strategic significance to innovate for them, as well as the method and process of innovation on ideology, regulations and business. First, the state-owned banks must change their ideology into "human is the most important", and accept the fact of the need of innovation and learn the advanced experience from their foreign counterpart. Second, the state-owned banks must set up modern enterprises management system. Going public is a good way to change their present management system, and let them become a real independent legalperson, who are fully responsible for the banks. Besides, they must reform the present personnel system and distributing system, to build a more competitive human resource system. And what's more, financial supervision is also a important aspect of innovation. Third, the state-owned banks should quicken their paces on asset, debt and intermedia business. The intermedia business will be the focus among the foreign banks and Chinese banks. The state-owned banks have better chances to develop the business because of their present advantages. At the same time, they must learn from their counterparts and keep innovating to beat the competitors.