A Study Of Incentive And Constraint Mechanism Of Financial Institutions In China

There are many drawbacks of the current executive incentive and constraint mechanism in Chinese financial institutions, particularly in state-owned financial institutions, which resulting in lower business efficiency and cost-effective, short-term behavior of managers, in pursuit of hidden illegal income, national institutions and the interests of customers. A series of economic corruption, financial executives and employees job-related crimes happened, which has fully exposed that there is a huge problem of the incentive and constraint mechanism of financial institutions. It is imperative to set up effective incentive and restraint mechanisms for the financial institutions'survival and development in China. Establishing an effective incentive and constraint mechanism in the financial institution is a complicated systematic project. By using economics,management, the law and sociology together,this article deals with the theoretical bases of the incentive and constraint mechanism and the practical problems we are faced with under modern enterprise system; and analyses the current problems which exists in the incentive and constraint mechanism of the management in the financial institution. On the basis of this,we come up with the idea of establishing the incentive and constraint mechanism in the financial institution and countermeasures of reforming and improving it. In addition to the introduction and conclusion, this article is divided into three parts: PartⅠthe major contents of the incentive and constraint mechanism under the system of modern enterprise. The incentive and constraint mechanism under the system of modem enterprise is divided into five sections: pay system,spirit system,control system,competition system and law system. PartⅡanalysis on the incentive and constraint mechanism of the management in Chinese financial institution, especially on the current situations of it and the problems it faced with. PartⅢthe measures of reforming and improving the incentive and constraint mechanism in the financial institution.