Financial Liberalization And Financial Regulatory Relations Research

Since the 1980s,there has been a trend of financial deregulation in the western countries, with the leader of the U.S.A. At the same time, the developing countries speed up their financial deregulation and reform, which accelerate the development of finance and national economy. However, it's clear that the deregulation reduces the Franchise Value of the banks and increases the fragility of the finance system. The deregulation of interests and the open-up of Capital Account increase the risk in finance system, what's more, the prosperity of financial innovation challenges the finance supervision. The series of finance crises in the 90s call people's attention to the reform of financial deregulation. Realizing the function of financial supervision in keeping out of crises, the study of deregulation and supervision is practically important. This essay analyses the relationship between them, by way of setting up Math's Model. It concludes that the financial deregulation is an unavoidable access to a country's financial reform, meanwhile, there should be a careful supervision, especially bank supervision during the deregulation. The last part of the essay offers some advices on the financial deregulation and financial reform of our country.