Research On Chinese Banking Supervision

The global financial crisis originated from the United States in 2007, shocked the world banking systems tremendously. As the ties between Chinese banking institutions and the international banking system are increasingly close, Chinese banking assets have suffered a major loss in this crisis. Thus the effective supervision on Chinese banking industry is not only the practical problem that we should attach great importance to, but also the strategic choice for the stable operation of Chinese banking system.In this article, firstly the historical development of Chinese banking supervision system is discussed, and then the banking supervision theories as well as the status quo of Chinese banking supervision is analyzed. The author discovers many problems in Chinese current banking supervision namely: on the regulative objectives, the emphasis on security and ignorance of efficiency increase the possibility of forming the non-performing banking assets; due to the disharmony between the mixed operation and sub-sector regulators, it is difficult to accurately define the regulatory scope of the sub-sector regulators in the mixed projects; the supervision on the internal control system of banking institutions is inadequate and the illegal operation incidents in banks occurred many times, and the moral hazard of banks is still very serious etc.. In this essay, analyzing the causes of the problems above, the author puts forward some policy recommendations to strengthen Chinese banking supervision as follows: understanding the relationship between the security and the efficiency correctly, establishing the regulative objectives namely stressing security as well as attaching importance to efficiency; establishing a united regulatory system taking the central bank—The People's Bank of China, as the lead, to meet the regulatory requirements of the development of the mixed operation of banking industry; attaching importance to the moral hazard prevention of the banking institutions and strengthening the supervision on the internal control system construction; straightening out the regulative complementary relationships between the government and the market; establishing the explicit deposit insurance system and improving the market exit mechanism for banking industry; establishing an international standard of information disclosure system gradually; strengthening the legal system construction of banking supervision; continuing to improve the international coordination and cooperation in banking supervision. The constant reform and innovation are the effective ways in solving the problems in banking supervision.