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Construction Financing Mechanism For The Efficient Operation

Posted on:2002-07-10Degree:MasterType:Thesis
Country:ChinaCandidate:G M LiFull Text:PDF
GTID:2206360032450252Subject:Political economy
Abstract/Summary:PDF Full Text Request
Financing activities play an importment role in economy life,especially for these developmenting countries. For the development ofeconomy and the improvement of the peoples life have alwnys been backed by in-putof capital. However, the short of money has covered a variety of countries,including China. This phenomenon has restricted the development of economy. So,how to make the good use of capital -----especially when the capital is limitedhas become the dominant problem for us,which demands a new financing mechanismdesigned to stimulate savings to transform into investments. To meet the requirementsof market economy, we must intensify the reform and set up financing mechanismrunning efficiently. Otherwise, there is no way to solve the problem of the short ofmoney.With the great changes of the allocation of national income, firms andgovernment have taken on most of the investing activities, while householdhave turned into the main supplier of savings. The separate of investingactivities and saving activities magnifies the difficulties of savingstransformation into investments. To adapt these changes, we should takemeasures to reform present financing mechanism.Firstly. some actions must be taken to rearrange the financingstructure .That is to say, direct financing should play an effective role ineconomy life and carry weight step by step. Considering this,capital market or securities market should be supported by government andbe encouraged to develop. Only by this way, firms can raise moneyfrom capital market and will not be pinched for money any more.At the same time, indirect tinancing should go on adjusting, especiallycommercial bank system must be established as soon as possible, andbank facilities should be under new management in accordance with marketeconomy rules. These retbrm actions can find a answer to badWtsprOb1em.Secondly, Govemment should change its financing manneL Govemmentinvestn1ents are usually put into such tields as railWny' harbor'communication, etc,which need a great amount of capital and firms areunwilling to touch upon .So government can raise money by issuingstock and bonds from domestic capital market as well as intemational capitalmarket .ln short, governlnent should not interfere in the financingactivities by tirms and commercial banks, and govemment financing activitiesshou1d be carried on in confOrmity with market economy rules.Tllirdly, The interest rate should be decided by the demand and supply ofcapital market. Govemment should set a standard rate fOr iflterest ratesystem and gradually loose the contrOl of interest ratC. At present, floatinginterest rate sVstem has come into effect, as a resu1t, commercia1 banksgain more right to decide the rate of the loans and dePOsitsaccording to market changes.Moreover, When savings gap and tbreign exchange gap are made upwith foreign loans. we must take Tepay terms into consideration. Foreignloans should tind their way in investment tields,not end in consumPtion.How to make the best use of forei8in loans is most impotheent foruS.
Keywords/Search Tags:Capital, Financing mechanism, Securities market, Bank credit creation, Deriving deposits
PDF Full Text Request
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