Electronic Money And Firm-Bank Relationships

Finance institutions are the key departments in the national economy, and play important roles in resources allocation. In China, on account of historical and cultural issues, commercial credits are underdeveloped. Therefore, the bank-dominated indirect financing will take the leading part for a long time.Bank-firm relationship is one of the most important economic relationships in today's business world. The bank-firm relationship of healthy and harmonious is important for the rapid development of economy.Since 1949, Chinese banking departments underwent several big scale reforms that influenced a lot in the bank-firm relationship. The reform achieved great successes, but still faced many unsettled problems, such as: finance corruption, huge amount of non-performing loans, moral hazard and adverse selections, and so on.Chinese banking reform mainly took the way of the western developed countries. But the developed countries themselves were also on the way of exploring and unable offered a success model. Therefore, China has to seek it's own way.The paper begins with the discussion of the relationship between function and structure of objects, and makes an imagine for the function of future banks. On this condition, the paper gives the possible model for the reform of bank-firm relationships.The paper proposes to set up electronic money account system, and take advantage of the newly added function to serve the firms more efficiently and effectively. The paper also discusses the possible modes of the cooperation between banks and firms.