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The financial market 金融市场 引言 金融市场是重新分配金融资源的市场。金融中介是将资金从银行借款人的一个过程[1]。筹措资金有两种形式:直接和间接的。直接融资,借款人和贷款人之间达成协议,直接将资金转移。这种方法由于风险很高，在现实世界中是罕见的。间接融资更普遍地存在于现代经济。这个传递过程会经过被称为“金融中介”的中间人。银行就是一个很好的例子。金融中介机构从高贷款利率和较低的存款利率之间的差异得到利润。传统观点的经济模型中, 在资本市场资源配置上没有金融中介机构这个角色。当市场是完全有效时,资金流动达到帕累托最优,就没中介机构改善社会福利的机会[2]。然而,这当然不是在现实世界中。银行的历史可以追溯到古代。即使到现在,它仍然在家庭储蓄转移到金融投资部分起主要作用。 Introduction Financial market is the market for people to reallocate financial resources. Financial intermediation is the process to channel the funds from lender to the borrowers[1]. There are two forms for the finance: direct and indirect. For the direct finance, the borrower and lender make agreements between them, and the funds have been transferred directly. This method is rare in the real world due to the high risk. The indirect finance is more commonly exist in the modern economy. The channelling process goes through a middleman, which is called "financial intermediary". Bank is a fine example for it. The financial intermediaries make profit from the difference between the high loan rate and low deposit rate. In the traditional view of economy model, there is no role for the financial intermediaries in the resource allocation in the capital market. When the market is in perfect efficient, the money flowing is Pareto efficient and there is no place for the intermediaries to improve welfare[2]. However, this is certainly not the case in the real world. The history of the bank can be traced back to ancient time. Even by now, it is still playing a major role in transferring saving from the household to the financial investment section. The financial market can be divided into equity market, and debt market. The equity market can be further divided into primary market and secondary market, which is commonly known as the securities market. On the other hand, the financial intermediation takes place in the debt market. In the modern economy, the financial intermediaries have become the most important source of finance than the securities market. In 2007, the funds from financial intermediation has reach $ 41 trillion in the US market, which is over double than the funds from the equity market. There are three major advantages for using financial intermediations for funding: firstly, it tends to lower the transaction costs. Secondly, it shares the risk for lending with all depositors and intermediary itself. Thirdly, it helps to reduce asymmetric information. Benston and Smith (1976)[3] states: by playing economy of scale, the intermediaries have a much lower cost of transaction. Later by Leland and Pyle (1977)[4], financial intermediaries have been defined to have more knowledge than the individual investors, and more time to analysis investments. It can avoid the information asymmetry by invest into the business it knows better. Gurley and Shaw (1960)[5] in their research pointed out, the intermediaries can be easier to diversify its financial risk compare with the individuals, by change its investment structure, and capital liquidity. The key factor to the financial intermediation industry is the existing of transaction cost. Compare with the other method, financial intermediation has lower transaction cost, which attracted more investors to use it joining the investment market. Since Benston and Smith pointed out this critical condition, there are many researches try to define the factors that may affect the transaction costs of the business. So far till now, there are three major factors that significantly influencing the cost of financial intermediation. They are bank regulations, market structure and institutions. According to Asli Demirguc-Kunt, Luc Laeven and Ross Levine (2004)[6], the cost of the financial intermediation can be measured by two parts: the interest margin, which is excess part from the interest rate for loaning and deposit rate, and the overhead costs of the general business operating. In the following part, a discussion has been made to identify the impact to the cost of financial intermediation through the three major factors based on its advantages. Bank regulations Nowadays, there are multi types of financial intermediaries in the financial market, for instance, banks, insurance companies, mutual funds and finance companies etc. Different financial intermediaries provide different financial goods and services. Compare with the expertise knowledge in the financial intermediaries, the customers tend to have little information about the produces they have purchased. In this situation, there is no doubt some regulations are needed to maintain the basic fair trading. Firstly, the regulations help to provide extra information to the investors. Secondly, it also ensures the soundness of the financial intermediaries. Like the other business, financial intermediaries are the organizations seeking for profit. Furthermore, compare with the other businesses, it has a much greater power to shake the very foundation of financial market, and need to be strictly regulated. The financial intermediaries act as the leverage to the financial market, which will enlarge the impact to the financial market. For the economy crises been existed, more or less you can see the leverage effect from the financial intermediaries involved. To protect the market and investors from the possible damage caused by the financial intermediaries, the government has established six types of restrict regulations to the financial intermediation industry only: restrictions to enter the market, disclosure of information, restrictions on gearing and risky activities, deposit insurance, limits on competition and restriction on the interest rates[7]. The following chart provided the listed agencies in the US financial System for regulations until 2001[8]. One of the reasons to set so many regulations is to increase the barriers to enter the financial intermediaries market. On one hand, it helps to reduce the cut-throat competitions within the industry. On the other hand, it also increased the initial cost to join the industry. . The barriers can block some weak competitors to join the market with risky investment plan. The large amount of initial funds for the charter has somehow set a very high initial cost for the financial intermediaries. In addition, there are strict regulations to forbidden risky investment from the financial intermediaries. Even their capital structure has been limited as well. As stated by FDIC[9], the banks in the US need to provide insurance for each account up to $ 100,000. In the other words, the bank can only use the part excess the $100,000 for investment One of the major reasons that the financial intermediaries have lower transaction cost is due to the high liquidity of its assets. This regulation has no doubt limited the assets liquidity of the bank. On one hand, the regulations have ensured the safety of the deposits. On the other hand, it has greatly increased the cost of financial intermediation. Furthermore, the regulations are very care about the information disclosure of the financial intermediaries as well. Financial market is a place for capital transferring. However, the value of the asset only represented in trading, without trade, the asset has no value. The value of the asset is based on the information been provided in the first place. Akerlof G (1970)[10] in the research claim, the investors only willing to pay for the information they know. If there is no enough reliable information, the bad products will tend to dominate the market. Due to the conflict of interest between the lender and borrower, the managers of the financial intermediaries also may release biased information to the market. It not only brings risk to the investors but the other financial intermediaries. As been mentioned above, the leverage effect brought by the financial intermediation can lead to disaster effect to the market. The case about Balin Bank about failure information has not only bankrupted the bank and the charted accounting company but caused a financial storm in the market. To avoid this situation, there is needed for regulation monitoring. SEC[11] in the US has very strict rules about disclosure information and insider trading. In addition, the government also have regulation about setting interest rates. As been mentioned above, the high barriers to entry has greatly reduced the competition within the market. The financial intermediaries may gather for abnormal profit due to the lack of supply. Their major profits come through the low deposit rate and high loan rate. By limited the level of interest rate, the government has limited the possible profit of the bank. At some point of view, the government set interest rate has also raised the cost of financial intermediation to a certain level. General speaking, the bank regulations has increased the cost of financial intermediation in several ways. Firstly, it tends to reduce the asset liquidity by setting barriers for the bank's capital structure and risky investment. Secondly, the government has restriction about the interest rate, which has limited the profit gain of the banks. Thirdly the large numbers of regulation agencies have force the bank to disclosure its information, which will increase the operating cost for the bank.#p#分页标题#e# Market structure Similar to the other business, financial intermediation market structure is affecting the cost of operating as well. However, due to the strict regulations set by the monitoring department, there is very limited competition within the industry. Some people argue, even within this situation, the general market structure still tending to concentration. Based on the "efficient-structure" theory, high concentration also means uncompetitive and less efficient. Monopoly in the market will tend to gain abnormal profit for its own benefit. The financial intermediaries are seeking to maximize its profit as well. In the monopoly market structure, the banks will charge higher for the loans, and pay less for the deposits. This point of view has been proved by Berger and Hannan (1989)[12], in a highly concentrated market structure, the bank tends to have higher overhead expenditures. Furthermore, by Neumark and Sharpe (1992)[13], the US banks are slower to response to Federal Reserve reductions in lower the loaning rate, when the market is in concentrated states. In addition, some other articles also claim there is a negative relationship between the market concentration and bank performance. The major reason behind this is based on the general demand supply relationship. As the market tends to be more concentrated, the banks will have more bargain power against the market. Therefore, it will show as some general problem existed in the monopoly market structure, e.g.: less efficient, extra cost to the customers and more profit. Smirlock (1985)[14] found the interest rates for different banks tend to be closer in the concentrated market structure. In general, it seems the banks are been less efficient in the concentrated market structure. The direct result is the rise in the overhead expenditure. However, there are some counter examples as well. In the similar time period, Boyd and Graham (1998)[15] in their empirical study point out, the relationship between the market structure and the banking efficiency are ambiguous. By the time been, the result shows the impact of market structure to the cost of intermediation are more depends on the other factors, For instance, the regulations, the country location and culture. Asli Demirguc-Kunt, Luc Laeven, and Ross Levine (2004)[16] have made a further analysis based on over 1400 banks across 72 countries. The data shows a significant positive relationship result at 5% about the market structure to the net interest margins of the banks. According to the data analysis table below[17], with reduction in the market concentration, the bank net interest margin will fall as well. This has supported the original point of view, in concentrated market structure; the financial intermediaries tend to be less efficient. The overhead expenditure tends to rise. Furthermore, the bank will raise its loaning rate and lower deposit rate to gain more profit. In the other words, the market concentration has a positive relationship with the cost of financial intermediation. Higher the concentration level, higher the cost as well. Demirguc-Kunt, A., Laeven, L. and Levine, R. 2004, "Regulations, market structure, institutions, and the cost of financial intermediation", Journal of Money, Credit and Banking, Vol. 36, No.3 Institutions In the past, the view about institutions to the cost of financial intermediation seems always conflict with the bank regulation and market structure. Engerman and Sokoloff (1997)[18] shows the countries with institutions tend to restrict to the competition. The institutions tend to protect the large financial intermediaries to maximize the efficient. Furthermore, Haber, Razo and Maurer (2003)[19] found out with in the form of institutional, the financial intermediaries can easily use the economy of scale to improve the efficient. The research from Acemoglu, Johnson, and Robinson (2001)[20] has also support this point of view. According to the information above, monopoly market structure, more opened banking regulation tends to build a more efficient financial intermediation market. There is no doubt conflicting with the finding above. However, all these researches have no doubt pointed out there is a strong relationship between the institutions and the cost of financial intermediation. Asli Demirguc-Kunt, Luc Laeven, and Ross Levine (2004)[21] have made an analysis to link the overall institutional environment to the cost of financial intermediation. The analysis is based on four indices: property rights, KK institution index, which is based on the research done by Kaufmann, Kraay and Zoido-Lobaton (2001)[22], economic freedom and GDP per capita. The result shows if the overall institutional environment tends to support the private section competition, then the interest margins are lower. In the other words, the cost of intermediation is lower. This point of view has been supported by other articles as well. Easterly and Levine (2003)[23] find out that the better institutions will promote greater competition throughout the economy, which will bring negative influence to the net interest margins. However, according to Bianco, Jappelli and Pagano's (2001)[24] research, theoretically speaking, the institutional environment effect to the net interest margins is unknown. The article states: with the improving of institutional environment, the average collateral for bank loans will increase, which will reduce the cost of financial intermediation for current loaner. However, it can also encourage the credit market move to lower grade borrowers, who with higher risk about bankrupt. To balance the extra risk, the bank tends to charge for higher interest rate. As a result, it may raise the average cost of financial intermediation. Although in theory the result can be unclear, if linked the impact from financial regulation and market structure, it shows the development of the institutional environment will enchant the significance of the market structure effect. Consider the limitation of pure theoretical model, there is no doubt in the real world the institutions has a negative relationship with the cost of intermediation. In the imperfect financial market, the financial intermediaries are playing an important role in transferring capitals and assets. With the developing of the institutions, the average cost of financial intermediation tends to reduce, which will further help the market growth. Conclusion To sum up, based on traditional model built by Arrow-Debreu, there is no place for financial intermediaries in the resources allocation in the financial market. Some theoretical study also support the impact from bank regulation, institutions and market structure is unclear. However, most of the study above is based on perfect market theory, the conditions of which do not exist in the real world. There are a group of increasing number of literatures claim the importance of financial intermediaries in the modern economy system. Compare with equity market, financial intermediaries in the debt market is funding at a much higher percentage to the financial market in a whole. Furthermore, the researches show there are strong relationship between the financial intermediation cost and the bank regulation, concentration and institutions. The influences between them are not separated. The change in one of the factors can affect the significance of the other factors to the cost of financial intermediation. According to Asli Demirguc-Kunt, Luc Laeven and Ross Levine (2004)[25], by restricting the bank regulation and activities, the bank net interest margins tend to increase. However, the change of market structure will directly affect this result. Based on the "efficient-structure", the competition will concentration the market structure and improve the efficiency of the financial intermediaries, which will lower the cost of the business in general. Furthermore, the importance of bank regulation and market structure cannot be deal isolated from the overall institutional environment. The institutions protect the fair competition in the market in general. By fixing the institutional environment, the bank regulation tends to loss the explanations to the cost change of financial intermediation. The market structure is in a similar case with the bank regulation. If control the bank regulation in the analysis, the relationship between the market structures and changing in the cost of financial intermediation will be unclear. Although there is some evidence to show the negative relationship between the cost of financial intermediation and the market concentration, they are still under some pre-conditions. Reference: Sullivan, Arthur; Steven M. Sheffrin 2003, "Economics: Principles in action", Upper Saddle River, New Hersey 07458: Pearson Prentice Hall. Franklin Allen, Anthony M. Santomero, 1996, "The Theory of Financial Intermediation" working paper. George J. Benston and Clifford W. Smith, JR., 1976, "A Transactions Cost Approach to the Theory of Financial Intermediation". Hayne E. Leland and David H. Pyle, 1977, "Informational Asymmetries, Financial Structure, and Financial Intermediation". J. G. Gurley, E. S. Shaw, 1960, "Money in a Theory of Finance", the Brookings Institution, Washington, DC Demirguc-Kunt, A., Laeven, L. and Levine, R. 2004, "Regulations, market structure, institutions, and the cost of financial intermediation", Journal of Money, Credit and Banking, Vol. 36, No.3 Frederic S. Mishkin, Stanley G. Eakins, 2009, "Financial markets and institutions", 6th edition, Pearson Prentice Hall. George A. Akerlof, 1970, "The Market for 'Lemons': Quality Uncertainty and the MarketMechanism", the quarterly journal of economics, vol. 84, issue 3.#p#分页标题#e# Berger, Allen N., and Timothy H. Hannan, 1989, "the Price-Concentration Relationship in Banking", review of economics and statistics Neumark, David, and Steven A. Sharpe, 1992, "Market Structure and the Nature of Price Rigidity: Evidence from the Market for Consumer Deposits", quarterly journal of economics 107. Michael Smirlock, 1985, "Evidence on the (non) relationship between Concentration and Profitability in Banking", journal of money, credit and banking. Boyd, John H., and Stanley L. Graham, 1998, "Consolidation in US Banking", in bank mergers and acquisitions, Norwell, MA: Kluwer Academic Publishers. Engerman, Stanley L., and Kenneth L. Sokoloff, 1997, "Factor Endowments, institutions, and differential paths of growth among New World Economies: a View from Economic Historians of the United States" in how Latin America fell behind, CA: Stanford University Press Haber, Stephen H., Armando Razo, and Noel Maurer, 2003, "the Politics of Property Rights: Political Instability, Credible Commitments, and Economic Growth in Mexico, Cambridge University Press. Acemoglu, Daron, Simon Johnson, and James A, Robinson, 2001, "the colonial origins of comparative development: an empirical investigation", American Economic Review. Kaufmann, Daniel, Aart Kraay, and Pablo Zoido-Lobaton, 2001, "Governance Matters II: Updata Indicators for 2000/01", Mimeo, World Bank. Easterly, William, Ross Levine, 2003, "Tropics, Germs, and Crops: How Endowments Influence Economic Development", journal of monetary economics. Bianco, Magda, Tullio Jappelli, and Marco Pagano, 2001, "Courts and Banks: Effects of Judicial Enforcement on Credit Markets", Working paper. Bibliography: Allen, F. and G. Gorton, 1993, Churning bubbles, Review of Economic Studies Bhattacharya, S. and A. V. Thakor, 1993, Contemporary banking theory, Journal of Financial Intermediation Boyd, J., and Prescott, E.C., 1986, Financial intermediary coalitions, Journal of Economic Theory Campbell, T.S., and Kracaw, W.A., 1980, Information production, market signaling, and the theory of financial intermediation, Journal of Finance Cuny, C.J., 1993, The role of liquidity in futures market innovations, Review of Financial Studies Diamond, D., 1984, Financial intermediation and delegated monitoring, Review of Economic Studies Gennotte, G. and D. Pyle, 1991, Capital controls and bank risk, Journal of Banking and Finance Leland, H.E. and D.H. Pyle, 1977, Informational asymmetries, financial structure, and financial intermediation, Journal of Finance Merton, R. C., 1989, On the application of the continuous-time theory of finance to financial intermediation and insurance, Geneva Papers on Risk and Insurance Theory Merton, R. C., 1993, Operation and regulation in financial intermediation: a functional perspective, in: P. England, ed., Operation and Regulation of Financial Markets (The Economic Council, Stockholm). Santomero, A., 1984, Modeling the banking firm, Journal of Money, Credit, and Banking Warner, J., 1977, Bankruptcy costs: some evidence, Journal of Finance Hughes, Joseph, William Lang, Loretta Mester, and Choon-Geol Moon (1999). "The Dollars and Sense of Bank Consolidation." Journal of Banking and Finance Diamond, Douglas W. (1984). "Financial Intermediation and Delegated Monitoring." Review of Economic Studies Wurgler, Jeffrey (2000). "Financial Markets and the Allocation of Capital." Journal of Financial Economics 6 Sullivan, Arthur; Steven M. Sheffrin 2003, "Economics: Principles in action", Upper Saddle River, New Hersey 07458: Pearson Prentice Hall. Franklin Allen, Anthony M. Santomero, 1996, "The Theory of Financial Intermediation" working paper. George J. Benston and Clifford W. Smith, JR., 1976, "A Transactions Cost Approach To The Theory Of Financial Intermediation". Hayne E. Leland and David H. Pyle, 1977, "Informational Asymmetries, Financial Structure, and Financial Intermediation". J. G. Gurley, E. S. Shaw, 1960, "Money in a Theory of Finance", Brooking Institution, Washington, DC. Demirguc-Kunt, A., Laeven, L. and Levine, R. 2004, "Regulations, market structure, institutions, and the cost of financial intermediation", Journal of Money, Credit and Banking, Vol. 36, No.3 Frederic S. Mishkin, Stanley G. Eakins, 2009, "Financial markets and institutions", 6th edition, Pearson Prentice Hall. Frederic S. Mishkin, Stanley G. Eakins, 2009, "Financial markets and institutions", 6th edition, Pearson Prentice Hall. Federal Deposit insurance Corporation George A. Akerlof, 1970, "The Market for 'Lemons': Quality Uncertainty and the MarketMechanism", the quarterly journal of economics, vol. 84, issue 3. Securities and exchange commission Berger, Allen N., and Timothy H. Hannan, 1989, "the Price-Concentration Relationship in Banking", review of economics and statistics Neumark, David, and Steven A. Sharpe, 1992, "Market Structure and the Nature of Price Rigidity: Evidence from the Market for Consumer Deposits", quarterly journal of economics 107. Michael Smirlock, 1985, "Evidence on the (non) relationship between Concentration and Profitability in Banking", journal of money, credit and banking. Boyd, John H., and Stanley L. Graham, 1998, "Consolidation in US Banking", in bank mergers and acquisitions, Norwell, MA: Kluwer Academic Publishers. Demirguc-Kunt, A., Laeven, L. and Levine, R. 2004, "Regulations, market structure, institutions, and the cost of financial intermediation", Journal of Money, Credit and Banking, Vol. 36, No.3 Demirguc-Kunt, A., Laeven, L. and Levine, R. 2004, "Regulations, market structure, institutions, and the cost of financial intermediation", Journal of Money, Credit and Banking, Vol. 36, No.3 Engerman, Stanley L., and Kenneth L. Sokoloff, 1997, "Factor Endowments, institutions, and differential paths of growth among New World Economies: a View from Economic Historians of the United States" in how Latin America fell behind, CA: Stanford University Press Haber, Stephen H., Armando Razo, and Noel Maurer, 2003, "the Politics of Property Rights: Political Instability, Credible Commitments, and Economic Growth in Mexico, Cambridge University Press. Acemoglu, Daron, Simon Johnson, and James A, Robinson, 2001, "the colonial origins of comparative development: an empirical investigation", American Economic Review. Demirguc-Kunt, A., Laeven, L. and Levine, R. 2004, "Regulations, market structure, institutions, and the cost of financial intermediation", Journal of Money, Credit and Banking, Vol. 36, No.3 Kaufmann, Daniel, Aart Kraay, and Pablo Zoido-Lobaton, 2001, "Governance Matters II: Updata Indicators for 2000/01", Mimeo, World Bank. Easterly, William, Ross Levine, 2003, "Tropics, Germs, and Crops: How Endowments Influence Economic Development", journal of monetary economics. Bianco, Magda, Tullio Jappelli, and Marco Pagano, 2001, "Courts and Banks: Effects of Judicial Enforcement on Credit Markets", Working paper. Demirguc-Kunt, A., Laeven, L. and Levine, R. 2004, "Regulations, market structure, institutions, and the cost of financial intermediation", Journal of Money, Credit and Banking, Vol. 36, No.3 |
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