Comparative Study Of Five Countries Of East Asia Financial Deepening And The Enlightenment

Finance has been more and more important in contemporary economics. Most developing countries have wanted to improve the rate of economic growth through financial deepening, but the process of reform was not smooth. As the largest developing country, China is undergoing the crucial stage of economic institutional transformation, financial developing and opening is our essential way, especially after the accession of WTO. How to promote the economic growth through financial developing while avoid financial crisis? This paper attempts to use financial development and repression theory to assess five countries' financial reform, based on a comparative study of the financial deepening in Korea, Malaysia, Indonesia, Philippines and Thailand, and then give some policy suggestions to China and other developing countries that are planning to carry out the financial deepening reform.The author starts from reviewing the development of the theory about financial deepening, providing theoretical background for following comparative analysis and positive study. In this part, the author also establishes an indicators system including quantitative indicators, structive indicators, price indicators and efficiency indicators, which will be used to measure the financial deepening process.The emphasis of this paper is the comparative study on the financial deepening in five eastern Asia countries, from financial reform background, measures and patterns, speed and order, and early stage results. Through the comparative study the author points out that financial deepening does have risks, but there is no cause-effect relationship between the financial deepening and financial crisis, what really matters is a comprehensive plan and the supervision of the process of financial deepening. There is no stereotyped pattern of financial deepening. We can't simply follow the theory or other countries' experience; instead we have to find a way that is suitable to one's own conditions.Then this paper gives experiences and lessons for other developingcountries based on the comparative study, from both the general theory and the specific policies.Finally, the author provides detailed analysis about the financial deepening process in China. The method here used is positive analysis, which means, the author draws her conclusions based on analyzing the relevant data. Examining the change of M2/GDP (money-to-capital ratio) and FIR (financial interrelations ratio), the two overall indicators that measure the financial deepening process, China has made considerable achievement. But on the other hand, there are lots of financial repression problems in China's current financial deepening process, according to the structive and efficiency indicators. The author points out that it is not enough to measure the financial deepening only by quantitative indicators, we should pay more attention to the improvement of quality and efficiency of the financial system. So it is essential to further deepen the financial development in China. But we can't take not only the way of financial liberalization raised by R. I. Mckinnon and E. S. Shaw, but also the way of financial restraint. This paper advances a new way, which is named "the No.3 way".