Study Of The Effectiveness Of Financial Supervision And Information Constraints

1,Background significance of selecting the topic On acceleration of economic globalization and financialinternationalization,financial crisis broke out several times after 1980's,which embarrassed the development of world economy and indicated thefinancial supervision and regulation system cannot suit the developmentof finance. Economy development and financial reformation of our countryhave won great success since 1978. However, the reformation of financialsupervision and regulation has been lagged of financial development,which restricted China's finance and the whole economy development. With the development of Principle-agent theory and financialintermediaries theory, information asymmetry has been known asimportant restrictions to finance development. So it becomes an highlyimportant task to solve information restriction, in order to secure financialsystem safe and stable and to restructure the financial supervision andregulation system. 2,Research Objects The research of this thesis emphasizes on banks, not including theother industries of finance. Financial supervision and regulation means the central bank or otherauthorities supervise and regulate the financial industries according to theauthorization by one government. Financial supervision and regulationdiscussed in this thesis is the generalized concept that includessupervision on industries' internal control, and social intermediaryorganization. The effective financial supervision and regulation includes both offinancial stability and competition. 3,Research Methods This thesis absorbs the principles and analyzing methods of westernmainstream economy, such as supply-demand analysis and comparativeanalysis. It also discusses by reference of modern mainstream economytheory, such as principle-agent theory, theories of regulation, game theory,financial intermediaries theory and so on. 4,The Main Points Information restriction is not only the cause of financial institutionsand financial supervision and regulation, but also the main cause offinancial crisis. Information restriction has much more negative effects on stablefinance rather than positive effects. Accordingly, it is necessary forfinancial supervision and regulation to create information disclosuresystem. The institutional design of financial supervision and regulationshould include incentive compatible of supervisee and the restrictions ofwhole market. It is critical to realize effective financial supervision andregulation by consist of the objective interests of all the marketparticipators. 5,Basic train of thought and main contents Starting with effective financial supervision and regulation theory,this article analyze the information restrictions in financial supervisionand regulation by way of principle-agent theory, and indicates that seriousinformation restriction is the cause of lowly effective financialsupervision and regulation in China. At last, this thesis promotes somesuggestions. This thesis consists of four chapters. The first part reviews theeffective financial supervision and regulation theories. The second part analyzes the information restrictions in financialsupervision and regulation and financial crisis by way of principle-agenttheory. The third part discusses information restrictions from the view ofsupervisor, supervisee and supervisory circumstances. The fourth part mainly promotes some suggestions on how to get ridof information restriction and to make our financial supervision andregulation more effective.