China's Commercial Banks And Financial Innovation And Business Development

Business innovation in commercial banks is the uppermost content of financial innovation. From 1970's, the international banking experienced a climax of financial innovation, in which a mass of new financial business were created as a result of the change of international economy and finance, the business scope of commercial banks was enlarged by a long way, and the mix-industry management has become a gullibility current. The step of business innovation in China's banking is slow. In the face of WTO,China's finance industry is entirely opened to outside, commercial banks in home will be confronted with huge impact of foreign banks. In order to take up an advantageous status in this drastic international competition, commercial banks in China have to quicken steps of business innovation, make great efforts to create varieties of new business of save, financing and investment, etc., by which to upgrade their international competence. Thus, there is important realistic and academic significance to China's banking currently in discussing business innovation in commercial banks. Since 1960's, with the release of regulation, the establishment of floating exchange rate system and the adoption of computer and communication technology in financial field, financial innovations surged in western countries' commercial banks that result creating many financial trade tools. By contrast, China's commercial banks lag far behind in the field of financial business innovations. Generally speaking, financial business innovations in western countries are aimed at two targets, one is to pursue profit, especially make profit from innovations, and the other is to escape regulation, so strengthen the management flexibility. Before every innovation is created considerate plan and comprehensive research are necessary on the related cost and benefit, the technology needed, the condition of market and the economic scale. However, our commercial banks always ignore the character of market during the financial innovations. As a result, few good profits have been barely achieved while banks had conducted many new businesses in recent years. With the increasingly heating-up competition in the financial market, how to develop financial business innovations is becoming an important problem faced China's commercial banks. This paper starts with the studying of the experience of financial innovations in western countries' commercial banks, combining with the present situation of financial innovations in China. The paper analyses the environment and conditions of developing financial business innovations, and then tries to advance the tactics and measures on how to develop financial business innovations in China in the coming two to ten years. And in the paper the author puts forward her own opinion on how to control risks of financial business innovations. This paper consists of four parts. Chapter I is the introduction, mainly explains the background of this paper, the literature review, the framework of the paper, and some important conceptions involved in the paper. Chapter 11:This part mainly studies financial business innovations in western countries' banks since 1960's. There were different objectives and contributing factors of financial business innovations at different history stages. While all of those innovations took place under the pressure of heated-up competition, prompted by the target of making profit when the external economic environment had changed. And those innovations were supported by high technologies that were applied in the field of finance. At the same time, theories of financial innovations became more abundant with the flourishing development of financial business innovations in western countries. The most typical theories were the theory of technology advancement, the theory of avoiding regulations and the theory of cost of exchange. These academic schools examined thecontributing factors of financial innovations from various angles. The practice of financial business innovations was based on these theories. And...