Systemically Important Financial Institutions In China Supervision Research

With the rapid development of financial liberalization, the competitions betweenfinancial institutions are intensified gradually. In order to deal with various aspects of thedomestic and international competition, some large financial institutions improve theircompetitiveness, conduct business innovation, and expand the company scale. Based on itsspecial status and the government’s invisible guarantee, in order to get excess benefit, theytake risks excessively, even exceeding their own ability to resist risks, and these institutionsare known as systemically important financial institutions. The negative externality is themost important feature of those institutions, which means the crisis of a financial institutionmay lead to the entire financial system’s instability, and even threats the national economicsystem. Therefore, when the systemically importance financial institutions bankrupt, thegovernment often rescue them in order to avoid the generation of systemic risk, and thus "toobig to fail" arises.In2008, The global financial crisis are triggered by America financial crisis, and thesupervision problem of systemically important financial institutions are generally consideredas one of the most important reasons leading to the crisis. In the financial crisis, in order toprevent individual financial institution’s bankruptcy to cause the entire financial system on theedge of collapse, governments of many countries, including American government, help bigfinancial institutions that are on the verge of bankrupt, so make the supervision problem ofsystemically importance financial institutions once again the focus of the financial industry.At the same time, in our country, the supervision problem also exists in systemicallyimportant financial institutions. Chinese government has repeatedly paid the bills for fourmajor state-owned commercial banks to divest non-performing assets and add capital. Andbecause of China’s special economic and financial environment, it is more urgent to supervisethem. After the crisis, governments and international financial organizations strengthened thefinancial supervision, put forward precautionary measure on supervision problem, whichprovide a reference for solving financial problems of systemically financial institutions in our country.The purpose of this research is to put forward the policy suggestions for our countryafter learning the experiences of other countries in supervision problems of systemicallyimportant financial institutions, and combining with China’s specific national conditions andour shortcomings in the existing supervision. Mainly including two aspects, one is theprevention measure for systemically important financial institutions before the crisis arisesand the other is the solving measure in crisis. The specific measures include: determinationof the assessment methods and systems for systemically important financial institutions;establishment of the effective policy framework for the disposal of financial institutions;enhancing the strength of supervision and effectiveness of systemically important financialinstitutions and so on.