| Essentially, the history of finance is the history of financial innovation. Financial innovation satisfied the demand of finance of the economic entity; there is new demand for finance with the development of economic. And financial innovation guarantees the substantial development of economic. At the same time, the financial crisis happened with greater frequency as the financial innovation developed.In the middle of 2007, sub-prime crisis happened in the USA and after that, sovereign debt crisis happened in Greece, Ireland, even the whole Euro area. The former is due to the bubble of the real estate market broken and the price of the housing mortgage-backed derivatives decreased sharply and the solvency of financial derivatives leverage risked bigger. The latter is due to some countries which wanted to join the euro took their own higher debt innovations in financial instruments to separate them from balance sheet, when these financial instruments are unable to pay, sovereign debt crisis happened because the sovereign debt paying ability dropped. These two financial crises make the educational circles and businessmen rethink and argue about the influence of financial innovation, the point is whether or not to continue financial innovation. Someone suggested the government should inhibit financial innovation, enhance the supervision of the financial products and financial institutions, especially the investment bank; at the same time, the government should increase the risk endurance ability and capital adequacy ratio of the commercial bank system. Someone believed that financial innovation was not the primary cause of the financial crises; we should confirm the benefit of financial innovation to society and should not deny the significance of financial innovation.Back to China, from planned economy to market economy, financial market is getting more and more perfect; especially these two years, there are many changes in capital market, currency market and foreign currency market. In capital market, there are stock of medium and small listing companies, stock index futures and experimental unit of margin trading and short selling, financial bond, and GEM (growth enterprise market). In currency market, there are RMB interest rate swap deals, FRAs (forward rate agreement), SHIBOR and small and medium-sized non-financial enterprises set bills to support the development of small and medium enterprises. In aspect of foreign currency market, China is on the formation mechanism of exchange rate reform, gradually realize exchange rate marketization. In aspect of financial institutions, China started set up financial leasing company pilot, consumer finance company pilot which enriched capital demanders lending way. In some extend, sustained economic growth of China and development of financial market innovation are inseparable.This paper tries to study the theory analysis of financial innovation, the development of western financial innovation and the role of financial innovation in financial crisis. This paper also wants to research the financial innovation situation of China trying to solve the following problem: one is what is the nature of financial innovation, what the pros and cons of different financial innovation in the risk and efficiency; Second, in the background of the current financial crisis, we look at how to correct financial innovation; Third, it is in China's existing economic and financial development condition, China's financial innovation condition how and how should promote China's financial innovation. The above problem for financial innovation theory research and counter measures study is a supplement to, has certain theoretical meaning and recognize that the nature of financial innovation, see, the present situation of Chinese financial innovation for robust financial innovation of China's financial market, improve the efficiency of economic growth and to hold realistic meanings.After discussing the theory and research status of financial innovation, the second part of this paper analyzes the financial innovation process of the United States, Britain and Japan and other economies, and also analyzed China financial innovation process. From the above national innovation process analysis found that financial innovation on the rapid development of the cause of economic development for the financial demand increase; On the one hand is financial institutions themselves in order to maximize profit unceasing increase financial supply; On the one hand is the national legal system and regulators gave financial innovation certain space. The development of financial innovation, improve the financial market of financial efficiency and national economy, the economic efficiency, including risk while, some financial tools lever mechanism etc also expanded the market risk.The third part of this paper respectively analyzes financial innovation relationship with subprime mortgage crisis and the European sovereign debt crisis. This paper argues that financial innovation is not the fundamental causes of the U.S. subprime mortgage crisis, but financial innovation tools highly leveraged character really bring a financial crisis in promoting the spreading of risk speed and impact range. Similarly, in the European sovereign debt crisis, financial innovation is not "ringleaders", but the debt crisis of the exchange rate fluctuations caused by the fluctuation caused asset prices, this instability through derivatives infectious and lever sex at precariously global. Financial innovation should develop with the entity economy demands, and timely, reach into regulatory category transparent within information.The fourth part summarizes achievements of China's reform and opening-up thirty years economic development and financial market system construction, meanwhile, from financial tool innovation, business innovation and market mechanism innovation three aspects analyzes present situation of China's financial innovation, and comparative analysis of four kinds of financial innovation tools, margin, trading and selling short, loan bought of asset securitization background and characteristics. China's economy is in rapid development stage, has made remarkable achievement, but China is still in the primary stage of development, have great potential of development; The financial system has developed rapidly, but still relatively backward, and there are many institutional problems to solve, and need further financial innovation.The fifth part of this paper sums up and proposes policy recommendations. This paper's mainly conclusions are: one is that the financial innovation development is gradually quickening of. The essence of financial innovation is the unity of financial demand and supply, the balance the risks and efficiency is the key; two is that the process of financial crisis tell us that financial innovation development should be adapted into the entity economy needs, and timely information within regulatory category, achieve transparent, financial innovation has the positive role, to reasonably determines its status, enhances strong points and avoid weaknesses; Three is that China's economic and financial development need financial innovation and financial innovation should match their huge development space, should actively develop financial innovation which adapts to the economy. Policy suggestions are as follows: 1, should conduct measurable financial innovation business timely according to the country's economic development's need; 2, financial innovation should be paid attention to in the process, according to our country's economic and financial environment in goals to choose the appropriate innovation, to improve the efficiency of the form of purpose; 3, in the meanwhile to speed up financial innovations, we should strengthen the corresponding financial oversight, timely analysis and detection of different financial innovation on market and participants, the influence of benefit and risk prevention ahead of the risk. |
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