As
an essential parts of modern economy, the performance of banks have a great influence on to the
stability of the economy and politics for each country. Recent years, bank regulation became an interesting issue.Economists had different views on bank regulation
and supervision. The free banking believer Selgin and White(1988, 1996) thought there was no necessary
to have bank regulators and central bank, because under the situation of free
market and competition in bank industry, all banks would act as a responsible role in
financial world.
However, Hickson and Turner (2002, 2004) thought bank regulation and supervision was very important and from the result of empirical studies on historical data of bank regulation, they found evidence that against for free bank theory. Also, Levine et al (2003)documented " the importance of banks for economic growth connected with their fragility has led governments to establish official agencies to regulate and supervise banks".
However, Hickson and Turner (2002, 2004) thought bank regulation and supervision was very important and from the result of empirical studies on historical data of bank regulation, they found evidence that against for free bank theory. Also, Levine et al (2003)documented " the importance of banks for economic growth connected with their fragility has led governments to establish official agencies to regulate and supervise banks".
Bank regulation and supervision
is a kind of government regulation that use the central bank(People's Bank of
China) and some independence regulators(China Banking Regulatory Commission) to control
other banks follow certain rules, restrictions and requirements, which is good
for creating a transparent and fair competition environment in banking industry, also it is good for ensuring a good development capability and financial security
of the economy.
There is a famous bank regulation system - the Basel
capital adequacy regulation (Basel I 1994, Basel II 2004, Basel III 2010) that
accepted by many developed countries (G10 and some other countries). Under this
system, regulation and supervision for domestic and foreign banks seems not very
difficult for those countries, because the home country of most foreign banks
are these developed countries. China is a developing country, and do not use
Basel Accord, now bank regulation system is still in a rapid developing stage in China,
especially after entry into WTO, many foreign banks enter the Chinese financial market,
which bring great opportunties and challenges for China about regulation and supervision of domestic
and foreign banks.
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