Theoretical Analysis And Policy Recommendations On Banking Supervision In China

Since 1990s, the bank system in many countries (especially in developing countries) had gone ever-emerging difficulty and broken through all kinds of bank crisis, which brought about much lose to economy. Therefore it is necessary to set up effective and solidities bank, supervision system in order to reinforce regulation and prevent crisis.Effective banking supervision can solidity financial system and boost the development of economy. The theory of bank supervision is the basis of supervision policy. The theory of bank supervision includes two part: universal market theory and theory between supervision and monetary policy of central bank, which involve conflict and unanimous. The paper chiefly, by analyzing the policy of financial supervision from economic theory foundation , argue .that the financial market failure is come from externality; inherent fragility and asymmetric information.In the course of economy transform, our bank system accumulate many system risk such as irrational capital structure; inadequacy capital and corporation governance structure. There are many problems in bank system, which make it not adapt to the international competition. Moreover, with the current of mix running, our banking supervision system will be exposed to series challenge.The article chiefly analysis the theory of banking supervision and then put forward some ideas in setting four risks prevent system.