Research Of The Risk And Management Of Network Bank

Network Economics , which follows Agricultural Economics and Industrial Economics, is a new economic formation of the society. Network Economics has swept the globe like violent storms since 1990s, and has brought remarkable changes to almost every aspect of the economy and society. As one of the authorities of Information Economics in China, Mr. Wu Jia Pei considers that Network Economics is the sum of all kinds of economic activities supported by the network, especially Internet. Network Economics based computer network is one kind of new industry economy and its key resources are information in the process of its forming and developing. Taking a look at present situation, as one kind of brand-new economy form, Network Economics is still a trend economy at present, but has already displayed several important characters, such as connectivity of economies, external effect and innovative effect.The Network Economics is supported by the Internet. For the convenience, rapidity and low cost of information transmission on network, more and more economic subjects participate into the Network. Thereupon, a group connected by the Internet is formed, which includes government functional organizations, lots of enterprises, intermediary organizations, the finance and insurance departments and numerous consumers. The Network Economics'leading industries are IT Industry, Service Industry and Financial Service especially.With the tide of globalization of finance, the finance industries of various countries have rapidly realized the electrization and networking in virtue of the development of electronic technology in order to enhance the competitive ability, widen the survival and development space, and cope with the intense international competition. Moreover, the compressive stress that comes from the requirement of globalization of economy and finance and liberalization of market transaction forces the financial organizations to continually advance the technological advancement and financial innovation, which, in the mean while, has greatly promoted the financial deepening and financial liberalizationTaking Network Economics as background, this essay introduces the rise of Network Bank. It points out that Network Banks, by right of their convenience and rapid ,have brought intense impacts to the organizational patterns of tradition bank. Computer and network technology are no longer only subsidiary means for bank management. Banks can provide finance services relying on the network which is open and worldwide connected. The advantages of Network Bank relative to traditional banks include saving of transaction costs, expanding of the range of services and adopting of new organizational patterns and managing ideas. The high-speed development of Network Bank has affected and verified relevant parts in the theory of Finance Innovation in practice.But, because of its character of dummy and the lag in management, Network Bank has brought a variety of impacts to the safety and stability of the financial system. Under the network condition, Network Bank's business range has already exceeded the restriction of time and space. Both the depth and extent of risk are unlimitedly expanded by the expansion of business range, the decrease of Money aggregates, and the acceleration of currency circulation speed.Network Bank bears not only the credit risk, liquidity risk and interest rate risk existing in the management of tradition banks but also the finance serve risk as a result of the information network technology and suppositional finance services because of its particularity,such as decision risk, technology risk, reputation risk, law risk , operation risk. And it will cause risks existing in tradition banks to be shown out in more complicated forms.At the same time, because the development of Network Bank is based on the development of information technology, and the business of Network Bank is carried out on the open international Internet, Network bank is also facing network security problem which tradition bank won't consider. It requires technologic safeguard.After the analysis of the risks and the security of operations of Network Bank, this essay raises some measures for the supervision on Network Bank, which is based on both traditional financial supervision theories and the characters of Network Bank itself.It points out that in the Network Economics, the particularity of Network Bank has made financial supervision become much more complicated. It has brought challenge to both theory and practice of supervision. This essay reviews the development of financial supervision theories, and makes some analysis based on Information Asymmetry and external effects, combining characters of Network Bank. It points out that the supervision should be adjusted. The Prudential Supervision should yield to Competition Supervision. Financial supervision and information inspection should work together. And the supervision system should be judged between National Treatment and Principle of "Lex Loci". With the ceaseless innovation of technology and product, the research of supervision of Network Bank is not only necessary but also unending.In our country, the problem laying before the supervisors is how to choose a proper pattern, a proper method and system of risk estimate, which is fit for the development of Network Bank in our country so that it will bring healthy and high-speed development and enhance the competitive ability of our country's Network Banks. First of all, we should reinforce the construct of policy and law for Network Bank in order to make the former supervision regulation be adjusted to the electronic network environment. Secondly, we should improve the durative supervision system, including both spot Supervision and Off-spot Supervision in order to adapt to the characters that finance service has lost the time restriction and region restriction, as well as suppositional trade objects. Thirdly, Network Bank must adopt a series of Internal Control measures. Through clear internal management, perfect regulations and the strict inside authorization, Network Bank will be able to implement effective identification, evaluation, inspect and control to all kinds of risks. Finally, we need to reinforce the international cooperation in supervision. In order to avoid weakening the financial regulation authority's ability to gain business information, which is caused by the high liquidity and hiding of money on network, we should strengthen the financial supervision authority's ability of dealing with the unexpected events. And we should coordinate international problems relevant to financial supervision which exceed national boundaries.