Cultural Factors And The Financial Management System Study

It has followed a tortuous path for the national fiscal management system from the establishment on planned economy to serving for market economy. There are various complicated factors leading to the formation of national fiscal management system with Chinese characteristics, such as economy, politics, society and history, however, culture, as an important one, can not be neglected. This paper is trying to find out the cultural effects on national fiscal management system from the respect of cultural dimensions advanced by Dutch scholar Hofstede, namely power distance, Individualism/Collectivism, Uncertainty avoidance, Masculinity/Femininity and Long-term/Short-term Orientation.Eventually, there are several deficiencies proposed for the national fiscal management system, such as too many fiscal levels, over-concentration of power, inadequacy of local public goods theory, imperfect of the rule of law and so on. Moreover, the direction and measures of reform are offered at last.Specifically, the first section begins with the connotation of fiscal management system, identifies the essential of that is the fiscal relationship of each level of government and explain the operation mechanism of fiscal management system from the following respect, division of responsibilities and expenditure, division of revenue, transfer payments between each level of government. Then, six reforms since the foundation of China are described separately, namely, fiscal system with unified revenue and expenditure from 1950-1952, fiscal system with the principle of unified leadership and decentralized administration from 1953-1978, fiscal system with division of revenue and expenditure between the central and local governments and with contracts at different levels from 1980-1984, fiscal system with separate categories of taxes, designated scope of revenues and expenditures and responsibility contracts at various levels from 1985-1987,fiscal system with Contracted financial responsibility at different levels from 1988-1993, and the "revenue-sharing-scheme" fiscal system from 1994 until now.The second section states the cultural theory at first, including the definition of culture, the relation between culture, organization and management. Then cultural dimensions proposed by Hofstede are specified to apply to China. It turns out that China is of large power distance, collectivism, a little masculinity, low uncertainty avoidance and long-term orientation.The third section is the core of the paper, which analyses the cultural effects on Chinese fiscal management system. Large power distance embodies in five-level national fiscal management system and the principle of unified leadership and decentralized administration. Collectivism prevented China from introducing local public goods theory and spillover theory during the planned economy time. However, With the development of the economic reform, people's values and behaviors are changing, and China began to use local public goods theory to analyze and explain problems of national fiscal management system. In addition, in low uncertainty avoidance environment, there is a lack of statutory restrictions for fiscal management system. And it prefers rule of man to rule of law. Meantime, the methods of leadership, restrict and control for the government at higher lever to the government at lower level are also reflection of low uncertainty avoidance.The fourth section is about to discuss the deficiencies in Chinese fiscal management system due to cultural factor, and make some suggestions, such as redividing fiscal levels, strengthening the fiscal management in a more standardized and law-based manner, and perfecting the local public goods theory.