In Finance, What Is a Water Stock?

The so-called financial suppression refers to the government's excessive intervention in financial activities and the financial system to inhibit the development of the financial system, and the lagging development of the financial system has hindered the development of the economy, which has caused a vicious circle of financial suppression and economic backwardness. These measures include financial policies and financial instruments adopted by the government to distort financial prices and interest rates.

Financial restraint

Right!

The so-called financial repression refers to the government's

American economists Gerry and Edward S. Shaw believe that economic development is the premise and foundation of financial development, and financial development is the driving force and means of economic development. Ronald I. McKinnon and Shaw are critical of traditional monetary theory and

Financial repression was targeted by American economist McKinnon et al.

Reduced capital market efficiency

Any measures that exacerbate the "financial restraint" will reduce the reasons for the restrictions

Financial restraint will hinder economic development, and in turn a sluggish economy restricts the accumulation of funds and the demand for the development of the financial industry, restricting the reform and development of the financial system. Therefore, our countermeasure is very clear, namely to accelerate the marketization of the domestic financial industry to adapt to the current development of economic and financial globalization.

Speed up the pace of marketization of interest rates

Marketization may still have some difficulties, but this does not affect the process of accelerating the marketization of interest rates. We consider that the marketization of interest rates can be carried out from the following levels.

First of all, the deposit and loan interest rates of rural credit cooperatives are fully liberalized, because rural credit cooperatives have accumulated interest for many years through interest rate fluctuations. After liberalization, rural credit cooperatives can negotiate interest rates with customers based on the availability of credit funds.

Second, expand the floating range of loans for city commercial banks. Urban commercial banks' loans are mainly targeted at urban SMEs, and it is these companies that scream for funding constraints, especially those with poor returns. Enlarging the floating range of loans for city commercial banks can allocate credit funds to SMEs with better returns, and reduce the size of loans to companies with lower returns.

Third, the loan interest rate fluctuations of other commercial banks should be appropriately expanded. In order to gradually adapt to the marketization of interest rates, the floating right to loans to commercial banks must also be gradually expanded to increase the flexibility in their lending processes.

Finally, after the relationship is straightened out, the marketization of interest rates will be fully realized.

Improve the supervision of financial regulators

For a long time, the pace of marketization of China's financial industry has been slow. An important reason is that the level of supervision of China's financial regulatory authorities cannot adapt. Taking the capital account in the balance of payments as an example, China lacks a supervisory mechanism to supervise capital flows. The supervisory method is backward and the supervisory foreseeability is insufficient. Once the signs of the Asian financial crisis in 1997 appear, if there is no control, there seems to be no more effective means . Therefore, financial supervisory departments must master and familiarize themselves with WTO rules as soon as possible, learn from the regulatory experience of developed countries, and formulate practical supervisory strategies to prepare the financial industry for full marketization.

Treat all institutions with open, fair and fair market principles

The classification of financial institutions in China is often based on the nature of ownership, such as the four major state-owned commercial banks, joint-stock commercial banks, urban commercial banks, and rural credit cooperatives. Moreover, in the process of formulating policies, a series of differentiated policy measures were also adopted, such as debt-to-equity swaps, non-performing asset divestitures, and earlier savings preservation subsidies, all of which were tilted toward state-owned finance as much as possible, which seriously affected The development of non-state-owned finance does not conform to the principles of open, fair and just marketization. An important principle in the WTO is the principle of national treatment. It is about giving foreign-funded enterprises the same treatment as domestic-funded enterprises. In fact, China has adopted different treatments for different domestic-funded financial institutions. To accelerate the market-oriented reform of the financial industry, financial institutions must be uniformly required in accordance with the Company Law.

Reduce the policy business burden of commercial financial institutions

Since the reform and opening up, although China's policy business of commercial financial institutions has been separated, it is not thorough, and some commercial financial institutions still undertake a large number of policy business. Taking commercial banks as an example, Agricultural Bank of China still has to bear poverty alleviation loans, and its proportion in its business is not small. Most of the non-performing assets formed by the Agricultural Bank are caused by this portion of poverty alleviation loans. In addition, the government has reflected its preference for companies of different ownership through the financial sector. For example, debt-to-equity swaps of the debts of large state-owned enterprises by the four major state-owned commercial banks, of course, it is unavoidable to require commercial banks to increase loans to state-owned enterprises in daily work. To deepen the market-oriented reform of the financial industry, it is necessary to completely separate the policy business of commercial financial institutions, so that commercial financial institutions can truly operate according to commercial principles. ^[1]