On The Perfection Of Legal System Of Financial Innovation Supervision In China

Financial innovation plays an important role in the economic development. Positive financial innovation can benefit the society and promote the democratization of the economy. Nevertheless unregulated financial innovations potentially hide fraud. It may cause financial risks even financial crisis. Financial innovation with uncertainty challenges existing financial laws and the financial regulatory system.This paper is to address the ways of financial laws and the financial regulatory system responding financial innovation. The first chapter analyzes the online financial innovation, including third-party payments, P2 P and crowd funding, etc. This chapter describes financial innovation phenomena. It reveals the progress of financial innovation and challenges it caused to the legal order and the financial regulatory system. The second chapter analyzes the existing financial law and regulatory system and reveals the defects. The third chapter summarized some developed countries’ lessons of responding to the financial crisis and financial innovation. The forth chapter suggests approaches to develop China’s legal system on financial regulation: To improve the coordination between regulatory agencies, to establish of a comprehensive financial regulatory agency; the amendment of laws, the creation of a more inclusive concept in the law; to strengthen the supervision of the regulatory agencies to avoid regulatory capture; development of special laws to protect financial consumer, in order to facilitate innovation and financial health of the financial industry, sustainable development; strengthen regulatory cooperation and exchanges with other countries, and so on. The paper holds that it is possible to prevent negative financial innovation and to promote positive financial innovation under the improvement of financial regulation.