What Is Financial Innovation?

Financial innovation (financial innovation) is to change the existing financial system and add new financial instruments to obtain potential profits that cannot be achieved by the existing financial system and financial instruments. Continued development process.

Financial Innovation

(Financial term)

But at the same time, the structure of the financial market is unreasonable, the financing structure of the enterprise is unreasonable, the types of financial instruments are single, the development of financial products is not standardized, and no legal protection is still present. To the fullest extent, how to eliminate the factors restricting financial innovation, what the development direction and focus of China's future financial innovation will be will be the key issues to be studied. China is a

According to this view, innovation includes technological innovation (product innovation and process innovation) and organizational management innovation, because both can lead to changes in the production function or supply function. Specifically, innovation includes five scenarios:

(1) the emergence of new products; (2) the application of new processes; (3) the development of new resources; (4)

Although most of the definitions of financial innovation originate from the concept of Schumpeter's economic innovation, the connotation of each definition is quite different. In summary, there are three levels of understanding of financial innovation.

Chinese scholars define this as: Financial innovation refers to new things created or introduced within finance through the recombination of various elements and creative changes. And think that financial innovation can be roughly divided into seven categories: (1) financial system innovation; (2) financial market innovation (3) financial product innovation (4) financial institution innovation (5) financial resource innovation (6) financial technology innovation (7 ) Financial Management Innovation

(1) Financial system innovation

The financial system of a country always evolves along with changes in the financial environment, such as changes in politics, economy, credit system, and financial policy. This evolution is not only a structural change, but also, in a sense, An essential change. Financial system innovation includes the reform and development of the financial organization system, the regulatory system, and the market system. It affects and determines the status and operation quality of financial property rights, credit systems, behaviors of financial entities and financial market mechanisms.

(2) Financial market innovation

Financial market innovation mainly refers to the development of new markets by bank operators based on the opportunities created by the operating environment in a certain period of time. Modern financial markets generally include: 1. Differentiated markets, such as currency markets divided by different content,

Financial Innovation China

Since the establishment of the Central Bank of China, China has been serving as a dual post. It is not only the maker of monetary policy, but also the supervisor of banks and non-bank financial institutions. The two often lose sight of each other and have some internal conflicts. After the establishment of various professional financial regulatory agencies, financial supervision is more professional and scientific. On the one hand, it enables the central bank to specialize in the formulation and implementation of monetary policy, thereby improving the effectiveness of monetary policy. Improving financial macro-control; On the other hand, various professional financial supervision institutions have been established through their own construction. Deepening and fine-grained financial supervision in specific areas will make supervision more effective and effective. ^[2]

Financial innovation

As the initiators of the financial crisis and the fuel of the European debt crisis, European and American banks deserve more reflection and introspection. In order to grab huge profits and launch high-leverage financial instruments with "toxicity", or to enlarge their own risk exposure in order to divide the tempting cake of the real estate industry, the innovation and risk-taking of European and American banks are actually built on the increasing On the basis of a stronger high-paying culture, the employees who are educated by the high-paying culture must be speculators who are oblivious to self-interest or harm others. Whether HSBC's "money laundering" scandal or Barclays' manipulation of Libor's misdeeds is enough to show that the high-wage culture prevailing in European and American banks has not diminished with the tightening of supervision after the financial crisis, but instead it is quite rumbling. Obviously, simple surgery is no longer useful for European and American banks. Instead, they must be urged and led to undergo a profound cultural reconstructionfrom high-paying cultural corrections to professional and service cultures. Among them, laws and shareholders have various regulations on high-paying banks. And the strengthening of supervision is indispensable.

It must be emphasized that financial innovation is a natural function of banks, but it should also be the responsibility of regulators. For example, with financial innovation, more and more financial derivatives and banking methods have become tools for money laundering. In this case, the perspective of European and American financial regulators should not stay on the traditional banking business; On the issue of Libor transformation, if we cannot abandon our stubborn attitude to traditional quotation methods, we will not be able to block the bank's manipulation space by increasing the number of quoting banks and adopting new transaction rates. ^[3]