Study On China's Banking Supervision System

Bank supervision system means the supervision and control on the banking institution implemented by a government or its agencies, including the restrictive provisions of market access, business scope and market exit, the compliance requirements of internal organization, risk management, and the laws, regulations and other behavior rule related to banking.The subprime mortgage crisis made rethinking of the bank supervision system necessary. The pressure of implementing Core Principles for Effective Banking Supervision, Basel New Capital Accord, and financial stability assessment is increasing, the internal and external environment is becoming more and more complex, problems of the entity economy and the financial system are intertwining, all of these have put forward new higher requirement to China's banking supervision, whether the content, approach, structure, or the improvement of law. The importance of banking regulation doesn't mean more regulatory is better, as a kind of economic activity, regulation can also produce costs and benefits, appropriate and effective regulatory has become one of the most important issue of China's banking supervision system design.This paper analysed the evolution of China's banking supervision system from the perspect of institution theory of Neoinstitutional Economics, came out with several characteristics of China's banking supervision system in the specific historical stage and economic environment, namely progressive, leading by government, non-independent vicissitude, lagging behind micro financial foundation etc. It also analysed the causes of institutional change in recent years from a supply-demand angle,thereby constructed the theoretical and empirical analysis framework for the history and future of China's banking supervision, and evaluated the effect of practice since the establishment of CBRC, proved that the improvement of China's banking ability could be partially attributed to the current bank supervision system. Based on these analysis, this paper probed into some important questions of the existing system from regulators, content and environment aspects, and pertinently put forward several suggestions. Furthermore, this paper made a in-depth research on the Financial Safety Net, focusing on improvement measures within the existing system, namely Outside-system Incremental Reform. At the last, this paper expounded its detailed views towards the tendency and strategic choice of China's banking supervision system, that separate supervision would still be a long-term institutional arrangement of China's banking supervision,the current strategy should maintain the current regulatory structure and strengthen the coordination of different regulators, it also suggested that transferring to unified supervision step by step would be a trend.