Study on Financial Regulation Based on Financial Efficiency
|School||Wuhan University of Technology|
|Keywords||Financial Regulation Financial Efficiency Game Theory Cybernetics|
Generally speaking, the main objective of financial regulation is to guard against financial crisis, maintain financial stability and protect the interests of depositors and investors. However, this objective of financial regulation inevitably leads to the contradiction between financial stability and financial efficiency, and the outcome is that excessive control " suppresses " the operational efficiency of the financial system, then causes the loss of social welfare and the failure of financial regulation. Therefore, the goal of financial regulation is not the financial stability, but the financial efficiency on the basis of financial stability, which will lead the social welfare maximization of the financial system.From the point of view of financial efficiency, the article attempts to reveal how the financial regulation plays a role to the financial efficiency, and how financial regulation impacts on improving the financial efficiency by using follow methodology: game theory, system theory, cybernetics, and so on. It effectively integrates the theory of financial regulation and efficiency. In addition, combins with the actuality of China’s financial regulation, the article provides new path to improve financial efficiency by strengthening financial regulation. Details are as follows:(1) Generalizes the theory of financial regulation and gives a review on the development of the theory of financial efficiency and Sums up the historical evolution of the financial regulatory objective.(2) Analyzes the impact of financial regulaton on financial efficiency from the connotation of financial regulation, financial efficiency and financial regulatory efficiency. By using cost - benefit method, it is found that financial regulation is the process of Pareto dynamic optimization to find the best efficiency point of regulation.(3) Sums up the basic principles of game theory, analyzes the application of game theory in financial regulation and discusses the impact of financial regulation on financial efficiency by combining the theory of financial regulation and game theory.(4) Discusses the application of control theory, cybernetics and system theory in the financial regulation. Based on the analysis of financial regulation impact on financial efficiency, cybernetics effectively integrates the theoretical knowledge of the financial regulation to analyze the external control mechanisms of financial regulation for the financial efficiency from price control.(5) Generalizes the changes of financial regulation of the United States, the United Kingdom and Japan, compares the financial regulatory system of these countries and the European Union and sums up the evolution trend of the financial regulatory system.(6) Analyzes the impact of China’s financial regulation on the financial efficiency and also gives empirical analysis on financial regulatory efficiency of China by the example of the securities market, then expounds the reasons for China’s financial regulation deviating from the financial efficiency goals. On the basis of above analysis, combines with China’s financial regulation status, the paper puts forward some policy recommendations.