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The equilibrium point for regulation and free - financial repression reason analysis

Author: GuZiAn From: www.yourpaper.net Posted: 2007-11-19 00:04:10 Read:
Strictly speaking, before 1978, construction of the state-owned financial sector in China, "is to make it become the capital supply department" of the state-owned enterprises, that is to say the system supporting state-owned financial arrangement is the government for the financing of state-owned enterprises and the establishment of the arrangement is convenient.This kind of system arrangement, the government centralized resource allocation plan operation mechanism, financial function into financial allocation function becomes the inevitable logic.Therefore, the development of China's financial, is actually a centrally planned economy to a market economy, from the structural system is carried out by the central government a "system to eliminate" state of the creation process.

because our financial began in the planned economic system, which leads to the deepening and development process with a clear government dominant color of finance of our country, the basic process is also a process of "decentralization".Since the reform and opening up policy in 1978, the economic development of our country's financial and monetary degree enhances unceasingly, the financial deepening effect is obvious, but there are still significant financial repression.

The unreasonable factors of the financial system to inhibit the financial development of

financial system is not sound restricting the healthy development of financial, mainly due to financial repression.Is the process of financial liberalization and financial reform of our country in its essence, is a process of allocation of financial resources by way of planned allocation to market allocation.And this process smoothly or not is the key to improve and perfect the financial system, such as interest rate, exchange rate system, supervision system, the main body of financial market behavior constraints related systems.Dynamic system as a must with the currency liquidity objective demand changing, the financial system is sound or not depends on whether the need for financial development adjustment timely, accurate.A country's financial system, including financial institutions, financial markets, financial regulation, monetary policy, interest rate system, payment system and financial supervision and a series of elements.

While China's financial system still exist many not adapt to the economic development of the area.The main are: the financial market system of examination and approval limits into the private finance, which has not only caused the monopoly and the imbalance in the structure of financial market, also led to the financing difficulties of private finance, the lack of competition in the financial industry, inefficient allocation of resources and other issues; interest rate regulation and cause interest rates do not reflect the supply and demand of capital market conditions, the nominal interest rate is lower than the the actual interest rates caused by bank loans in the "inert" and "credit crunch", the macro-control in lowering interest rates can not effectively mobilize savings, interest rate increase can not effectively stimulate investment embarrassing situation; the system is asymmetric information theory cause increased risk of financial transactions, the transaction cost increase, and to a certain extent, led to the financial market the main body of the "adverse selection" and "moral hazard" speculation.The financial system has obvious inhibitory effect on financial development, must be improved by "the system of elimination" and "innovation", so as to China's financial deepening and create a reasonable and effective institutional environment for the growth of.

The role of government is not very appropriate

The role of government in the financial sector led to the failure of the financial repression.As early as in 1973, Mackinnon and Shaw are in his book "money and capital in economic development" and "financial deepening" in economic development is pointed out, the premise of economic development is not inhibited by the financial.In most cases, government intervention in the financial strategy to prevent or hinder the process of economic development.The new strategy has a "deepening" effect -- Financial Liberalization -- always promotes the development of.Freedom is essential to economic development.

in any case questioned Mackinnon and Shaw's "financial liberalization" advocates, one point is worth affirmation.We must convince the markets of the effect on economic development.

in the financial markets, some local governments are both "referee" and "dual role players" led to the financial resources to depend more on the government rather than market efficiency.The four major state-owned commercial banks will loan 80% to state-owned enterprises, and the non state-owned enterprises are difficult to get loans, resulting in the lack of normal channels of financing.This not only limits the development of non-state economy, will exist for a long time also caused underground finance, cause financial chaos.

in the long run, government financial resources to flow into the intervention and the planned deployment is not conducive to the development of the economy as a whole.The role of government to avoid errors caused by the "suppression" effect, speed up the transformation of government function and role, specific ways: to speed up the reform of the state-owned commercial bank business; commercial banks to improve the internal governance structure; adjust the relationship between the financial and the government finance; construction of further strengthening our financial policy of the government should be formulated; intervention financial resources to the economic development and financial deepening to provide good service, strengthen the service function of the government.

state-owned banks is not the real enterprise

financial market "vacancy" will cause the following aspects of financial efficiency, which leads to financial repression:

first, the absence of the financial market will lead to the lack of competition, resulting in the formation of monopoly, resulting in low efficiency of financial.The highly centralized government limited financial resources, to ensure the effective mobilization of national financial resources to support the "privilege" of the state-owned enterprises and the implementation of a "planned distribution type" credit rationing system.In addition, the government also strictly limit their access to the regulation of the financial sector, which has not only caused the state financial monopoly financial market "unified" pattern, on the other hand also limits the diversified economic development.State-owned financial and state-owned enterprises in the ownership has have all kinds of connections with contact, not clearly defined the property, is the direct cause of rising credit inefficiencies and financial risk.At present, China's large number of bank bad assets is proof.

secondly, the absence of main body of financial market caused by insufficient competition, causes the original financial institutions lack competition, product innovation power insufficient, risk aversion tendency.To change the current state of non-equilibrium subject in China's financial market structure, through the financial system innovation to set up an effective entry and exit mechanism, enhance the enthusiasm of the micro finance main body, is China's financial reform must address the people in the WTO and meet the challenge of economic globalization problem.

thirdly, the absence of main body of financial market leads to financial market transaction costs, but also caused significant financial repression.Because of the financial market structure imbalance in China, state-owned financial occupy the main position in the financial markets, and other forms of ownership of the financial subject is very little, which aggravates the information asymmetry of financial market.The prerequisite for the smooth conduct financial transactions is the rational expectations of both sides, in order to make the deal as self-interested expected, both parties must accurate information as much as possible to gather information about the transaction, this will bring increased pay cost.

in short, the financial reform in the process of financial deepening in the pursuit of goals, obviously can not simply rely on a realization approach, the equilibrium point and should look for government financial regulation and financial development "".
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