Theoretical and Policy Proposals of Financial Theory in Institutional Change

Author: Xu Nuojin
Publisher:
Publish Date: 2004-03-01
Features: This book proposes many original viewpoints on some economic and financial theories and practical issues during China's institutional transformation process, such as "economic cycles stem from the inherent nature of market economies and the synthesis errors of entrepreneurs' expectations; the central bank should 'do less' but 'do more effectively,' and cannot expect the central bank to solve all problems, including economic growth, social unemployment, and state-owned enterprise difficulties. Centered on 'people,' strengthen supervision, introduce 'cost and benefit of violations' into the design of financial regulatory systems, combine monetary policy with risk disposal, and in periods of deflation, utilize the space of monetary policy to mitigate social risks. Financial risk is a challenge faced by all countries in the world, with soft budget constraints where failure costs are socialized. For the risks of China's small and medium-sized financial institutions, different categories should be distinguished and handled accordingly. Attention should be paid to combining exit with rescue, prioritizing rescue in the short term, combining immediate solutions with long-term reforms, prioritizing immediate solutions, and combining the closure of 'people' with the closure of 'institutions,' prioritizing immediate solutions and individual disposal. China's financial reform and development should adopt a leapfrog strategy, focusing on resolving property rights and governance structure issues, establishing isolation mechanisms to prevent the socialization of financial risks, and other theoretical viewpoints and policy proposals. These have had a significant impact in both academic and decision-making circles, demonstrating a perfect combination of theory and application, making it a book with the characteristics of 'innovative without being eccentric and theoretical without being obscure.'"