Establishing Financial Firewalls In China: Research Based On Financial Deregulation

"Firewalls" are a set of laws, policies and measures to restrict the defects caused by financial deregulation. Now financial deregulation is implemented in China, but during this institutional change period, institutional absence is formed because of the lack of institution supply and rising institution demand. And great risks and system contagion may be brought by this institutional absence. So it's put forward that firewalls must be built to fix the institutional absence.Then, how to establish effective firewalls is discussed in this dissertation aiming at complex Affiliated Transactions in financial conglomerates. And international experiences about how to establish effective firewalls are introduced and analyzed.Afterward, firewalls are divided to "Regulatory firewalls" and "Self-discipline firewalls" according to who set up them in this dissertation. And it's pointed out that problems as increasing financial cost and appearing loopholes will come into being because of over-strict regulatory firewalls. So it's necessary to raise self-discipline firewalls to assort with risk and efficiency. In this dissertation, it's advanced to set up Regulatory firewalls at first, bring up Self-discipline firewalls secondly and reach well interaction of both to form dynamic firewalls at last. It's a way to establish financial firewalls in China suggested by this dissertation.