Current Situation of China39;s financial innovation and development of Path Analysis.doc

Current Situation of Chinas financial innovation and development of Path Analysis Abstract financial innovation is the driving force of financial development, but also the deepening of Chinas financial reform, the inevitable choice. This paper analyzes the status quo of Chinas financial innovation and features, in-depth exploration of the path of financial innovation and development that should be in the organizational system, management system, financial markets, financial products and regulatory aspects of innovation, to further promote Chinas financial innovation has important theoretical significance and practical significance. Keywords: financial innovation; the status quo; Development Path First, the meaning and role of financial innovation Financial innovation lies in “innovation,” appears in the financial sector as long as new things, new phenomena, new activities can be considered a financial innovation. Financial innovation has broad and narrow sense. The narrow sense refers only to financial instruments, financial innovation, innovation. Broader financial innovations include financial instruments, financial markets, financial services, financial system, financial institutions, financial instruments, including the entire financial system innovation. The emergence of financial innovation is not by chance, in essence, it is the objective requirements of economic development is the development of financial markets to a certain stage of the product. Finance is the core of modern economy, rapid economic development of the existing financial system makes it difficult to adapt to new needs, so innovation was put on the agenda. Of the last century 60s wave of innovation in Western countries is the rapid economic development, the financial sector increasingly competitive and the rapid progress of science and technology against the backdrop of the. From the development process of financial innovation, we can see that financial innovation occurs mainly due to: First, in order to avoid risks and enhance security. The world economy, integration and complexity, allowing commercial banks raised funds gradually increase the safety risk factors, credit risk, interest rate risk, exchange rate risk and inflation risk, policy risk, and many other factors make it volatile asset prices, which prompted banks and other tried every means to financial institutions, through innovation, developing new financial products and financial services to avoid risks, and strive to fund security. Second, in order to meet the clients and their needs, to enhance liquidity. For the financial industry faces a variety of customers, their demand for funds and financial instruments, there is a big difference, and this requires development of many innovative financial products and financial liquidity of different financial tools in providing customers with a profit the same time, but also liquidity to meet customer needs. Thirdly, in order to adapt to competition, and enhance profitability. Financial institutions operating cross-increasingly evident, increasingly fierce competition. In order to win the competition, all financial firms must pay attention to cost savings, improve service quality, competition for the market. In this environment, in order to achieve profitable growth, financial institutions, financial innovation must be carried out in order to achieve the goal of profit maximization. Fourth, in order to escape controls, increased flexibility. In the financial control and financial conditions, legal constraints, the financial sector operation is constrained, earnings are affected, in order to bail out the financial industry through innovative services and innovative tools to evade controls, forcing authorities to deregulation. Fifth, computer and communication technologies driving advances in new technology and new products. The 20th century era of rapid scientific and technological development in 80,90, in particular, is based on computer and communications technology as the core of the rapid development of information technology for the financial sector development and financial innovation has provided technical support. Technological progress makes the operation of the financial industry into the paperless electronic age, so as to finance the re-combination of elements provides more space for the promotion of innovation implementation. Of financial innovation as an important driver of financial development for the entire financial industry and even the operation of the whole economy has produced an extensive and far-reaching impact. On the one hand, financial innovation to promote competition in the financial industry and financial system efficiency. Financial innovation has allowed a variety of financial institutions, businesses break the traditional limitations of growing mutual penetration, thereby promoting competition in the financial industry. At the same time, financial innovation created a multi-function, diversified and efficient financial products and financial services to meet the different categories of consumers at different levels need to expand sources of funding and the use of the scale, an increase of profit opportunities. The use of modern science and technology to reduce transaction costs and improve work efficiency and strengthen financial institutions, the vitality and competitiveness, thus promoting the development of the entire financial industry. On the other hand, finance is the core of modern economy, financial innovation, the development of the entire national economy also play a catalytic role. Through financial innovation to diversify financing channels, flexible forms of financing in order to better meet the fund raiser to financing the different requirements for economic development to provide more adequate financial support. Meanwhile, the financial sector through financial innovation and enhanced ability to resist risks, in order to create favorable conditions for financial stability. The financial stability is an important guarantee for the healthy development of national economy and the premise for the stable flow of financial intermediation and monetary environment, in order to have the coordination of the entire economy, sustained and stable development. 2, Analysis of Financial Innovation in China Chinas financial innovation from Chinas reform and opening up gradually after the start, after 20 years, has made remarkable achievements, mainly reflected in: The organizational system, the establishment of a unified central bank system, completed the line of the Central Bank region of institution-building framework, and formed a four state-owned commercial banks and more than 10 joint-stock commercial banks as the mainstay of the banking system, the restructuring of urban credit cooperatives for urban commercial banks, securities companies established nearly a hundred bodies, a number of insurance agencies and other non-bank financial institutions, initially forming a multi-ownership structure, the coexistence of a variety of financial institutions, financial enterprises system. Meanwhile, the relaxation of foreign bank branches and insurance market access conditions, the initial establishment of the foreign exchange market, accelerated the pace of opening. In the management system, the central banks plans from a purely financial control into a financial macro-control, regulation and control by the planning, administrative measures to focusing on the main economic and legal means to change; relaxed operational control of financial institutions, the specialized banks urban and rural areas can offer yuan, foreign exchange and other business and fair competition; the management of credit funds from the “unified planning, classification management, deposit and loan linked to the difference between lump sum” to “Planning, self-seeking balance, the proportion of management, and indirect control “The continuous reform of commercial banks fully implement the asset-liability ratio management; foreign exchange management system and achieved exchange rate and the RMB convertible under current account and so on. In the financial markets, forming a multi-species, multi-level, beginning to take shape in the financial market system. Establishment of inter-bank, commercial paper and short-term government bonds, mainly money market; the establishment of inter-bank foreign exchange retail markets and enterprises, banks and the interbank foreign exchange wholesale market, the central bank and the open operation of the inter-bank foreign exchange market, a combination of a unified foreign exchange market; in the capital market, was established in order to underwriters mainly a market to Shanghai and Shenzhen Stock Exchange trading floor as the core, City Securities Trading Center in the external, local brokerage sales department for the network of the secondary market. In financial services, debt service on the emergence of hedge savings, housing savings deposits, trust deposits, trust deposits, and other new varieties; assets of the business appeared mortgage, pledge loans, mortgage loans and other species; the middle of the business launch of diversified services to run personal remittances, personal checks business, expanding the agency business, develop multi-functional credit card and so on. In financial instruments, mainly treasury bills, commercial paper, short-term financing bonds, repurchase agreements, large negotiable certificates of deposit and long-term government bonds, corporate bonds, financial bonds, stocks, bonds, benefits, stock certificate, closed-end funds, open-ended funds, money market and capital market financial instruments. In the financial technology, financial institutions and raise the level of electronic equipment, electronic information technology is widely used in finance. At present, China has the full realization of the electronic transfer of funds of financial institutions, securities trading electronic, information management, electronic and office automation, the emergence of electronic money, “Card”, online banking, online stock trading and other new types of electronic financial services and networks in the financial technology to achieve the docking with the international financial industry. From the above analysis we can see that Chinas financial innovation has fully rolled out. Through financial reform and innovation, enhancing the competitiveness of Chinas financial industry and anti-risk ability, improve the efficiency of financial enterprises and service quality, improved quality of credit assets, and earnings of gradual improvement, which greatly promoted the development of the financial industry , but also for the development of the entire national economy has provided a strong financial support. However, generally speaking, Chinas financial innovation is still at a low stage, the main manifestations: first, to absorb innovation and more innovation and less original. To financial instruments, for example, since the reform and opening up and innovation over more than 100 kinds of financial instruments, but 85% is imported from Western countries. Second, to expand the number of innovation and more innovation and less quality improvement. The bank card business, for example, in recent years, commercial banks invested in the bank card business, a lot of manpower, material and financial resources, the number of bank cards issued has been considerable, but the use efficiency is not high, forming a large number of cards and no sleep benefit cards, and the inter-bank fragmented, resulting in duplication of bank card business, functions similar to, which not only resulted in wastage of resources, but also affected the bank card fast and efficient development. Third, the liability class of business innovation and multi-asset class business innovation less. For a long time, deposits and other liabilities of business is Gejia relatively fierce competition, financial institutions, businesses, financial institutions and tools for business innovation introduced innovations are most abundant in this area. The loans of financial institutions has long been a monopoly of resources, thus significantly less than the liabilities of business innovation. Fourth, the coastal city of innovation and more innovation in smaller inland cities. Chinas market economy from the economic zones and coastal cities to initiate, DC, and the first coastal cities to break the shackles of the traditional system, relatively loose financial controls, financial markets are more active, these are for financial innovation provides a good external environment. Thus, Chinas financial services and financial instruments, innovation is often the first produced in the SAR and the coastal cities, and then gradually to the mainland to promote inland cities lag behind financial innovations evident in the coastal cities. Fifth, the external force to promote innovation and more innovation in the internal driving force for less. Chinas financial innovation mainly by structural transformations, and policy reforms promoted by external factors such as central bank management system, management tools the reform and innovation has become a micro-financial institutions, the major external driving force of innovation, while the main body of financial innovation that is inherent in financial institutions, innovative impulse is clearly insufficient. Sixth, the pursuit of profitable innovation and more innovation in less risk prevention. Introduced a number of innovative products are now more of a for profit, in addition to foreign exchange business have options, swaps, forward rate agreements and some commodities, some of the important features of risk management, financial instruments, such as swaps, options trading so basically there is no business in the yuan and other innovative activities in guarding against financial risks are largely concerned about the financial institutions did not become a basic innovation. Reposted elsewhere in the paper for free download Third, Chinas financial innovation and development path Analysis The partys third plenum adopted the “CPC Central Committee on perfecting the socialist market economic system, the decision of a number of issues,” pointed out that commercial banks and securities firms, insurance companies, trust investment companies, etc. to become the capital adequacy, strict internal control, run security, services and benefits are good for a modern financial enterprise. This provides financial enterprises pointed out the direction of reform and innovation. “Decision” and proposed “graspin