FINANCIAL DISINTERMEDIATION: A COMPARISON BETWEEN CHINA AND THE UNITED STATES AND BEYOND

Grace Mingyan Du

2023년 1월 · American Academic Press

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With historical and comparative method, this book explores financial disintermediation which besets both the United States and China and extends the thinking up to the evolutional trend of capitalism and socialism. Different from the previous research, this book delves into the first cause which induces financial disintermediation, namely the basic deficiency of capitalism: liquidity crisis, and the countermeasures which various institutional systems have taken for dealing with it. The conclusion reveals that the upheaval was initiated from the founding of financial safety net. During the Great Depression, by adopting financial safety net, the previous evolving track of American financial system was ended, and a new path launched – financial disintermediation. The starting point for China was the setout of “the reform and opening-up”. In the West, financial safety net formulates a dualistic regulatory regime, which spurred financial disintermediation. Severe financial disintermediation has led up to a series of thorny issues, including the resurgence of liquidity crisis, the financialization of the economy, and too-big-to-fail, and debt overhang and widening wealth disparity and so on. In China, the main difference with its western counterpart should be the replacement of asset quality deterioration in financial system to liquidity crisis. The root problem lies in that some matched institutions needed for guaranteeing its positive effects are desperately absent or weak, so it is a must to strengthen them, and steadfastly arrest financial disintermediation simultaneously. For that, both regimes should learn from each other.

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Grace Mingyan Du is an independent scholar with Ph. D. In 1975, she was born in China. In 2008, she was graduated from China University of Political Science and Law, majoring in Civil and Commercial Law, then dedicated to credit rating in a China’s credit rating agency for eight years. She was also a visiting scholar at the Law School of Duke University in the United States, and a part-time professor at the China-Eu Law School lecturing financial law.