Study On The Procedure Of Financial Institutions

Every company should be regulated by market in a market economy environment, which means only the fittest survives and has access to better environment and resources for development. This rule is also applied to financial institutions. Although there have been some relevant cases of financial institutions exist from market and an initial legal framework of bankrupt system has been established, the number of the case of financial institutions which proceeds to bankrupt procedure attributed to financial crisis and losses its corporate capacity through bankruptcy liquidation yet is very little in practice. This is not only because of traditional ideas that believe financial institutions will not be bankrupt, but also lack of enough realization of financial institutions which leads to an independent bankrupt legal system for financial institutions not being able to be established. The article provides relevant suggestions to the establishment and improvement of bankrupt procedure of financial intuitions, which is based on the analysis of specificity of financial institutions and of their bankruptcy, a series of designs for the procedure such as the start of the procedure, the reorganization procedure and the bankruptcy liquidation procedure, and also reference to extraterritorial experience. Legislation model for bankrupt system of financial institutions should be primarily considered and it should be independent, which means being distinguished from the common bankrupt law, especially for the details of the procedure. Secondly, the supervision system for financial institutions should be established and the present warning system should be improved, due to the infectiousness and explosiveness of financial crisis, and the possible serious consequence that it might bring to society. Lastly, a compensation system such as the insurance for deposit should be established and the enterprise should be separated from the administration to guarantee the best interest of the creditor.