Interest-driven and legal supervision innovation of the capital pool model in Chinese banking financial products

Abstract

This paper studies the formation, interest-driven rationality and potential risks of the capital pool model in China's banking financial management business, as well as the correlation, coincidence and complexity of fund pool prohibition and the rigid payment strategy. Focusing on “The New Regulations on Asset Management” issued by the Chinese government in April 2018, this paper discusses the regulatory effects and existing problems of fund pool prohibition and rigid payment regulations. From the perspective of theoretical and empirical analysis, this paper studies the impact of the relationship between financial product yield and regulatory interest rate relationship on shadow banking. The paper also studies the capital pool model that is closely related to the shadow banking, rigid payment and unstandardized debts, so as to puts forward relevant policy suggestions on improving the external regulation and optimizing the internal control mechanism of shadow banking. This paper puts forward that pursuit of financial security value should not be independent from the development of the overall interests of asset management market. The reasonable and healthy development of the asset management industry should be guided by the principle of controlling the risks at an appropriate level. The regulations in relation to capital pool and rigid payment needs more flexibility and elasticity to help reduce or eliminate the negative impact on the efficiency of resource allocation in the asset management industry. Shadow banking plays an important role in the financing of small and medium-sized enterprises, which is the result of mutual competition and game between different banks in terms of yield rate. Moderate shadow banking scale plays a positive role in the macro economy. This argument has theoretical value and practical significance to ensure that the regulatory system is resilient to the financial system in the most effective way possible.