Operating System In The U.s. Financial Sector Evolution And Revelation

Abstract The formal adoption of Financial Services Modernization Act in the United States triggers a heated discussion on the selection of banking system. The U.S., as a typical country going through the transition from separate banking system to universal banking system, serves us a valuable example that will facilitate the research in this field. Therefore, following the approach of positive analysis, this paper explores into the evolution of the banking system in the U.S. in an attempt to uncover its significance for the selection of China抯 banking system. The paper is mainly composed of four chapters and the contents can be divided into three parts. Part One, i.e. Chapter One, defines some major concepts of this paper and analyses the causes and driving forces of the evolution of banking system by using the theory of the New Institutional Economics. The paper holds that the motive of commercial banks to internalize the external profits is the fundamental cause of the evolution of banking system and the financial innovation is the direct driving force of it. The development of financial supervision system and that of banking system should be coordinated in order to keep the balance of institutional structures. This part lays a theoretical foundation for the following positive analysis. Chapter Two and Chapter Three constitute the second part of the paper. namely. the positive analysis of the transition in the U.S. from separate banking system to universal banking system. Chapter Two focuses on the financial innovations created by American commercial banks during this process, including the innovations in financial business and organizational structures. as 2 well as their influences upon the banking system in the U.S.. Chapter Three investigates the causes and the features of the evolution of the financial supervision system in the U.S.. and the financial supervisory authorities?practice to reinforce the supervision against the commercial banks?financial innovation activities. Then the characteristics of the financial supervision system in the U.S. can be summarized. The third part, i.e. Chapter Four, discusses what we can learn from the U.S. practice. In this part, first, an overview of the historical development of China抯 banking system is made. Second, the status quo and the possible orientation in the future of China抯 banking system is analyzed. The conclusion is that it is not a proper time to adopt universal banking system nowadays, and the separate banking system is the realistic choice in China at the present, but the transition from separate banking system to universal banking system is an inevitable tendency in the long run. Finally, the paper dwells upon the problems of control in the gradual actualization of universal banking system and points out that a great deal needs to be done by China抯 financial institutions and supervisory authorities.