Correlation Research In Financial Innovation And Financial Efficiency

The efficiency in financial system is a critical problem our financial and economy reform meets. Nearly half a century, we see the financial innovation has been booming throughout the globe and it has proved to be useful tools to boost the financial efficiency. This paper intends to study the interactions between the financial innovation and financial efficiency, and try to find resolutions to enhance the financial efficiency through the financial innovation.First, this paper will study the creation and diffusion course of the financial innovation to find how they interact between the financial innovation and financial efficiency. In this section, we will find the pursuit of the financial efficiency stimulates the creation and diffusion of the financial innovation, and the financial efficiency or inefficiency will promote or impede the creation and diffusion of financial innovation.As the following, the paper probes the way the financial innovation enhance the financial efficiency. In this section, the financial innovation will be distributed to three categories: institution innovation, technology innovation and instrument innovation. The way each sort of the financial innovation enhance the financial efficiency will be discussed respectively. Generally speaking, the financial innovation can help to build a marketised transaction system, promote the perfection level of the financial market, improve the information condition and decrease the transaction cost to promote the financial efficiency.The third part of the paper will study the effects the financial innovation brings to the financial efficiency. It will be discussed in three levels of the financial efficiency: the macro-efficiency, the micro-efficiency and the market efficiency. It can be find that the financial innovation has two-sword effects in the financial efficiency.At last, the actualities, the main problems and its' causes of the financial innovation and financial efficiency of our country will be discussed. On the basis of what has studied before, the effective measures to promote financial efficiency through the financial innovation will be presented in the end.