Regulation Of Conflict Of Government Functions In Supervising State-owned Commercial Banks

The State-owned Commercial Banks play the key role during the economic development of our country. They once provided huge financial support to our economic transformation and for this reason they got into difficulties. At present, a new round of reform of State-owned Commercial Banks has been taken by our government. The goal of this reform is to adopt share-holding reform in 4 major State-owned Commercial Banks and make them list enterprises.To reform the state-owned commercial banks thoroughly, this thesis concludes that the first point is to seek the source of the problem of state-owned commercial banks. The basic reason of the problem of state-owned commercial banks lies in the conflict of government functions, which causes that the state-owned commercial banks support the nation's economic policies partially but overlook its financial risks to the society. According to the present situation, the government shall keep on its control to the state-owned commercial banks in the future. Therefore, the problem of conflict of government functions shall continue.The conflict of government functions during the process of supervising the state-owned commercial banks is in itself the conflict of interests. The government invests directly and controls the banks on its own, at the same time it supervises the banks on behalf of the public. In practice, the bank supervisors sometimes plot together with the state-owned shareholders to serve the government will. They overestimate to protect the nation's interests but take less attention to protect the society's interest. The conflict of government functions brings harmful effects in the state-owned commercial banks, the whole banking and the social public.In the modern society, rule of law is the most useful way to control the conflict of interests. The thesis holds to establish a dynamic structure, from right to power, to deal with the complicated financial activities, and to establish a valid system, from motivation to restriction, so as to exert the effect of rule of law better. Concretely, the government's intervention to economy should have a rational boundary, and the government's quitting state-owned commercial banks should be considered as its ultimate objective. Based on it a well-operated corporate governance of bank should be established. Of course, the establishment of an independent and valid bank supervision system is also imperative.