On The Effectiveness Of Financial Regulation

Along with the development of modern financial industry, the influence that is caused by the finance to one country or even the whole world's economy becomes more and more importance, and the finance has become the core of the modern economy. While the finance speeds up the economic development, financial risk has been increasing simultaneously and financial crisis breaks out frequently, its great damages have been shown. In some sense, the history of financial development is the history of financial crisis and turbulence. For sake of keeping financial stability, many countries have established various financial supervisory institution .The practices to explore and improve the supervisory system has been more than one hundred years in western countries but this can not guarantee the continuously breaking out of financial crisis. An important reason to cause this situation is inefficient in financial supervision this problem need to be considered further more, that is why I choose this topic to study.Definitions and methods used in my article. In this article, efficiency of financial supervision is defined as minimize supervisory costs so as to achieve the anticipated supervisory goals. Realizing efficient financial supervision refers to many factors including manage system, managing skill, and so on. Any concrete supervisory method and skill is not involved in this article.Main structure and contents as following:First, this article reviewed relevant theory on financial supervision. Thesetheories include government regulation theory, general reasons for financial supervision and special reasons for financial supervision.Second, this article analyzed the criterions of the efficient financial supervision.Third, this article emphasizes the influence of efficient financial supervision, which comes from financial supervisory goals; financial supervisory model, asymmetric information and financial globalization. 1. The final goals of financial supervision are stability, efficiency and justice. Financial supervision can be classified into six concrete goals in order to realizing the final goals.2. How to select the proper model of financial supervision. 3. To analyze financial innovation on efficiency of financial supervision. 1. To analyze asymmetric information between supervisor and the supervisee on efficiency of financial supervision.5. To analyze financial globalization on efficiency of financial supervision.Fourth, according to the above analyses, the article gives the methods on how to improve financial supervision in our country.The main innovation in this article:First, according to economic theory, the article analyzed the right criterions of efficient financial supervision.The second, the article classified the goal in financial supervision into final goals and concrete goals, analyzed the conflicts among the different goals and its different influence in financial supervision.The third, this article used the theories in the information economics, analyzed the asymmetric information between supervisor and supervisee.Finally,the article give the measures on how to reduce the asymmetric information.The fourth, this article analyzed the financial globalization bring the influence in financial supervision and its influence in financial supervision of our country after entry of WTO.