Study On Legislation Of Precaution About Chinese Regional Financial Risks

With the development of market-oriented economy, local financial industryexpands greatly, while it is associated with an increase in implicit and explicit risks.Financial risks are called economy cancer, indicating that if the risks are notcontrolled or prevented efficiently, they would bring about huge destructive force andcatastrophic effect. Local finance plays an important part in the whole nationalfinancial system, thus if the implicit and explicit financial risks in the local financialindustry would not be handled properly, they could threaten the national and localfinancial safety, even cause severe financial crisis. In April of2007, the subprimemortgage crisis exploded in America and its ill influence still exists. Hence theprevention of local financial risks attract scholars’attention.On the basis of the local financial risk conception, prevention theory andinternational financial crisis prevention countermeasures, this thesis aims to build aframework of statutory rules to financial risks prevention and provide suggestion onthe legal mechanism perfection from the perspective of local government’sresponsibility. Five chapters are arranged in the thesis in order to explore and analyzethe local government’s measures to prevent local financial risks in a novel way.Chapter one is the introduction, focusing on literature review of the local financialrisk prevention at home and abroad and presenting the methodology and objectives ofthe thesis.Chapter two analyzes the basic theoretical framework of local financial riskprevention. It firstly defines the concept of the local financial risks and illustrates thelocal financial risk types, prevention characteristics; then itpoints out the financialrisks prevention objectives and the necessity and theme of legal rules; finally it recapsthe theoretical foundation of the local risks prevention.The current situation, root causes, prevention practice, achievements and existingproblems of local financial risks are embodied in Chapter three.Chapter four studies the advanced experience on the financial crisis preventionabroad. All governments around the world have their own policies and systems toprevent and defuse financial risks and promote economic recovery. There are threekinds of local financial regulation: two-level diversity regulation system, single-leveldiversity regulation system and centralized single regulation system, which arerespectively corresponding to America, Germany and Japanese.Basing on the advanced experience from other countries, this chapter evaluates briefly the effects ofthe policies and measures, then withdraws related measures the local governmentsshould take in China.Chapter five throws out relative suggestion to local government on how to dealwith local financial risks effectively. First, the local government’s financialmanagement right should be defined clearly, endowing local government’smanagement right and drawing a line for the right. Second, promote the perfectionlaws and provide the specific measures. Third, predict the possible problems duringthe prevention process and enhance the accountability system to make sure thehealthy and orderly local financial environment.