Financial Regulatory Failure Analysis And Prevention Mechanism

This text attempts to carry on the preliminary discussion on the issue that financial supervision does not work, analyse its origin cause of formation,and then combine our country's present situation, point out the precaution mechanism that should be established, in order to improve the efficiency of financial supervision of our country. This text take qualitative research approach as the core, but for its explains to be clear , some question have used some quantitative analytical methods too.Limited by one's own knowledge and ability , a lot of views and methods that this text puts forward still have many defects , its perfection and improvement await forther study in the future , here ,I hope every teacher criticize and give directions to offer more too.The full text is divided into four parts altogether: First part that has introduced the concept of the financial supervision and that supervision does not work, introduce the definition drawing financial supervision without working and the intension of effective financial supervision through the introduction of the definition, content, goal and validity of financial supervision, for in the back of analysis that financial supervision does not work to make least preparation in concept . Second part analyse the reason why financial supervision does not work From view of " demand range ".It point out: Because of the existence in such factors as the information asymmetry , financial safety net ,etc, the agent's risk behavior and risk are shifted and encouraged, have resulted in supervision without working and the unstability of financial system. Shown as unsymmetry information and adverse selection problems , moral risk problems and other situations that may cause the financial system to be unstable . And it has analysed the special risk brought in financial group's development in particular, has pointed out all these will cause supervision does not work . The third part has analysed the reason why financial supervision does not work in terms of" supply range ". Point out: It is the main reason that cause supervision to be poor efficiency that financial supervisionauthorities is lack of the encouragement to offer efficient supervision .Looking briefly, financial circles supervision include agent relationship of two layers: one lies Between the public and supervision authorities, the other lies between the authorities and financial institution..In case of information asymmetry, because the public and supervision authorities, also the supervision authorities and financial institution ,have different goal utility functions, the encouragement between the public and supervision authorities , the supervision authorities and financial institution ,is conflicted in the financial supervisory system. This kind of encouragement conflict will cause information rent of supervising authorities and lose of the public's welfare ,thus make financial supervision unable to realize the social optimum goal. The fourth part points out precaution mechanism that puts forward financial supervision and avoid it does not work. It put forward corresponding precaution mechanism in view of "demand range" in terms of " supply range " separately, also have proposed relevant related mechanisms. From aspect of "demand range",we should strengthen financial institution supervision to contain by oneself and financial institution transparency construction , pursue functional regulation and supervision to keep a lookout; In terms of" supply range " , we can dispel main factor of conflict to form disencouragement through transparency construction ,optimum contract of financial supervision ,design with system who arrange for measure.so as to Reduce extend of supervision without working, to improve the efficiency of supervising. Expand such relevant related mechanisms as Put forward the independence of strengthening the Central Bank, and the international cooperation of financial supervision ,etc.