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Current Situation and Problems of Local Financial Regulation in China(No.58, 2016)

2016-06-13

By Chen Daofu, Research Institute of Finance, DRC

Research report No.58, 2016 (Total4941) 2016-5-12

Abstract: The financial regulatory obligation and organizational framework of various provinces in China show great differences. Local financial regulation is dispersed among several departments, specific obligations of different financial offices are different and so is the organizational framework. Compared with the huge and complicated supervisory targets, local financial regulation offices possess rather limited resources which are mainly in the hands of province-and-city-level governments whereas the financial regulation resources of county-level governments are rather limited. The lack of resources is extremely mismatched with local financial institutions, leading to a severe shortage of regulatory measures. In reality, the obligations of local economic financial development, local financial regulation and local financial risk bailout are not completely consistent. Local financial offices are more concerned about local financial development. Some of the financial regulatory measures, especially in the aspect of cracking down on illegal financial behavior, still lack clear legal basis. However, the local governments have to shoulder the major responsibility for risk prevention and control for local financial institutions and similar financial institutions. Local financial regulation offices have their eyes mainly on review and approval items while neglecting daily management, resulting in a number of overlapping and non-fulfilled issues. Besides, incoordinated reform has also restricted the effectiveness of local financial regulation.

Key words: local financial regulation, regulatory resources, similar financial institutions