格拉斯哥卡利多尼亞大學管理專業碩士課程essay：An Analysis of Innovation, Creativity and Enterprise in Financial Service in China and USA Since 1970

 

 

1引言2

2行業分析2

2.1引言金融服務業2

2.2，在中國和美國3個金融服務業的發展

3。0個創新，創新和企業3

3.1個創新，在中國和美國3個金融服務創新和企業

3.2比較創新，在中國和美國之間的金融服務創新和企業4

3.2.1不同的啟動點4

在創新的5創新程度3.2.2差異

在金融監管環境5 3.2.3差異

在市場化的5 3.2.4差異

在經濟和科技發展的差異5 3.2.5

在定位策略6 3.2.6差異

4結論6

5參考6

 

 

 

Table of Contents

1.0 Introduction 2

2.0 Industry analysis 2

2.1 Introduction of financial service sector 2

2.2 Development of financial service sector in China and USA 3

3. 0 Innovation, Creativity and Enterprise 3

3.1 Innovation, Creativity and Enterprise in Financial Service in China and USA 3

3.2 Comparison of Innovation, Creativity and Enterprise in Financial Service between China and USA 4

3.2.1 Different startup point 4

3.2.2 Difference in degree of originality of innovation 5

3.2.3 Difference in financial regulation environment 5

3.2.4 Difference in Marketization 5

3.2.5 Difference in development of economics and science 5

3.2.6 Difference in localization strategy 6

4.0 Conclusion 6

5.0 Reference 6

 

 

 

1.0Introduction

Along with the last assignment, Innovation, Creativity and Enterprise will be continually discussed in this report. To fully understand the theories about innovation, creativity and enterprise learned in class, we choose the financial service sector in China and USA for appliance. 

 

 

The current condition of financial service sector in China and USA will be addressed in the second part. And the process, product and practice of Innovation, creativity and enterprise in financial service sector in both countries will be revealed and analyzed in the following part. In the last part, a refined conclusion of this report will be presented. 

All the information and quotes come from published papers, articles and data base in both soft and print versions in the Internet or library.在中國和美國金融服務業的現狀，將在第二部分中討論。與過程，產品創新和實踐，在這兩個國家在金融服務業的創新和企業會發現，在下面的分析部分。在本文的最后一部分，本報告將介紹精致的結論。

所有的信息和報價來自發表的dissertation，文章和軟，打印在互聯網或庫版本的數據庫。

 

 

2.0Industry analysis

2.1 Introduction of financial service sector

According to classic economics, financial service means the economic services provided by a large range of profit or nonprofit organizations, including commercial bank, investment bank, insurance companies, consumer finance companies and other government sponsored enterprises. It contains a lot of sub-sectors, and the main are banking service, foreign exchange service, investment service, insurance service.

Nowadays, financial service sector plays an increasingly important role in one country’s economy (Zviand Robert, 1999). The degree of its development becomes one of the most influential determinants of modernization of society and competitiveness of one country or region.

 

 

Chart 1: Financial service process flow diagram

2.2 Development of financial service sector in China and USA

Since 1970s, financial service sector in USA has been witnessed anever-lasting booming in scales of both input labors and capital. The revenues even go higher and higher as the margins get wider.It has been one of the supporting pillars of the economy (Merton, 1986). Based on the statistics revealed by US government, financial service sector counts for as much as 20% of the market capitalization of the S&P 500 in USA, which is one of the biggest contributors to the economy.

 

 

While in China, financial service sector starts up much later than in USA. The emergence of financial service sector followed the Reform and Open in late 1970s. It developed under the severe regulations of the central administration in 1980s, and the commercial banking services like deposit are the mainstream. Then the industry springs out as socialized market economy became the priority of the country. Securities brokers and underwriters surge as capital market established in Shanghai and Shenzhen. Insurance companies enjoyed a wonderful time as well. So far, financial service has been part of ordinary people’s life in China, which count for 12.8% of value added in City Beijing, and it has a strategic economic status in China’s ambition for national rejuvenation.#p#分頁標題#e#

 

 

3. 0 Innovation, Creativity and Enterprise

3.1Innovation, Creativity and Enterprise in Financial Service in China and USA

As most commonly quoted interpretation says, financial innovation means the change of current financial system, the creation of new financial instruments and the improvement of existing financial process to exploit abnormal returns that haven’t been earned by existing financial instruments or financial system in financial market (Robert, 1992). It happens inevitably since economy advances and people’s needs never be fully satisfied.

In China, market need is the core engine for financial innovations. For example, to meet state owned enterprises’ financing needs, security market was established in Shanghai and Shenzhen in 1990, and asset securitization implemented for infrastructure and public projects. To realize more convenient, precise and safe transactions among individuals and corporations for business or daily living, different kinds of bank cards are invented, like debit card for payment and credit card for advanced spending by overdrawing. Most of these innovations aren’t carried out by only one party. Instead, just like the triple helix theory describes, parties like government, universities and enterprise actively coordinate and cooperate with each other to fulfill the task and maximize the welfare of their own.

As for USA, huge waves of financial innovation come to prevalent for different core ideas with different products in decades since 1970s. In the 70s, disintermediation spread around in financial world to avoid the tough regulations on the financial practice, and newly created financial products like Large-denomination Negotiable Certificates of Time Deposit, which is short as CDs, became popular in the interbank market to satisfy investors’ various needs. Then deregulation became the core concept in the following decades. A big deal of M&As took place to form some Mega financial companies with diversified financial business of commercial banking, investment banking and insurance, as Citigroup is the typical example. However, since the world financial crisis broke out in 2008, heavy regulations on financials are eagerly demanded, and deregulation wave disperses. What’s more, considering the huge damages financial collapse can make, risk management becomes more pivotal for corporations both financials and non-financials (Robert, 2008). A lot of financial derivatives like futures, options and more complex derivatives underlying basic financial assets come to exist for public needs. In all these innovations and processes above, government- or enterprise-sponsored economists and financial experts contribute a lot, which justifies Triple helix of university-industry-government functions (Ann, 2012).

 

 

3.2 Comparison of Innovation, Creativity and Enterprise in Financial Service between China and USA#p#分頁標題#e#

As the contrast situation between China and USA revealed above, Innovation, creativity and enterprise in the two surely differs in some aspects for some reasons. Through the analysis of information in hand, six contrast points have been summarized as follows:

 

 

3.2.1 Different startup point

Innovation,CreativityandEnterpriseinFinancialservicesector in china began to develop aftertheformationofsecuritymarketin1990, which means that the history of financial service is quite short(Lievens&Moenaert, 2000). Compared to the USA, where the financial innovation surged in 1970s on the basis of the historical financial service practice since late 19th century, China’sfinancialinnovation developedquitelately.

 

 

3.2.2 Difference in degree of originality of innovation

The financial service sector in China lacks in originality and mainly copies the advanced international products, processes and service, especially the financial service practice in the USA (Arnoud et al., 1997), which can be explained by the lack of financial service practice and sound financial function system. While innovation, creativity and enterprise in financial service sector in USA are wide-ranged, containing a full length newly invented products or improved process in all sub-sector like commercial banking, securities and insurance.

 

 

3.2.3Difference in financial regulation environment

The financial regulatory environments faced by the two countries are different. The theory of deregulation has gradually become the main stream in the USA since the 70s, and economists, politics and financials all agreed on that, which results in more radical and challenging trades in financial market and inspires people to innovate for self-interest (Charles, 2000). What's more, the deeply rooted self-discipline belief in registration system results in less and weaker regulation. However, in China, where the approval system is adopted from top to bottom, the regulation is much more rigorous (Andrea and Daniele, 2011), which allows little freedom for financials and individuals to innovate and challenge the custom.

 

 

3.2.4Difference in Marketization

The marketization develops to different levels in the two countries. The marketization develops deeply in the USA, where the tight combination of school, government and market is appealing to stimulate the financial innovation(STEPHEN, 2012). And the commonly believed liberalism and self-interest capitalism spirits help to shape the market (Robin, 1997). However, the relatively weak connection and short time of market economy, which transited from planned economy since 1978, result a quite lower level of marketization in China. 

 

 

3.2.5Difference indevelopment of economics and science#p#分頁標題#e#

As financial participants diversifies and financial transaction becomes more and more time-continuous and information-sensitive, combination of economics and science like mathematics, physics and in financial service sector are eagerly required, Which makes the research and development ability of country’s universities or institutions matters most (Lerner, Sorensen& Strömberg, 2008). Hence, China suffers a lot for the undeveloped economics and week combination of economics and science, compared with USA.

 

 

3.2.6Difference inlocalization strategy

Every excellent idea or innovation is based on the life and surrounding environment of the thinker. Different social believes, economy situations and financial practices in China and USA inspire different innovations in financial service sector (James, 1998). As higher deposit rate accompanies China, financial service innovations in commercial banking business counts the big bulk of the entire (Eugenia &Chia-Yu, 2005).

4.0Conclusion

 

 

Innovation, creativity and enterprise gradually turn into the engine of the human beings as the Knowledge Time comes, and financial service sector is in the central place in this movement. As countries like China and USA analyzed in this report, social and cultural background, economic and educationalmodernization all affect the process and development of innovation, creativity and enterprise. To fully understand these principles underlying the complex happenings is critical for strategy development and scheme implement in the future world.

 

 

5.0 Reference

A. Lievens, R.K. Moenaert, 2000. Communication flows during financial service innovation. European Journal of Marketing, 34(9), pp.1078-1110

Andrea Filippetti and Daniele Archibugi, 2011. Innovationin times ofcrisis: National Systems ofInnovation, structure, and demand. Research Policy, 40(2), pp.179-192

Ann Ling-Ching Chan, 2012. Innovationactivity and corporate financing: evidence from a developing economy. Applied Financial Economics, 22(20), pp. 1665-1678

ArnoudW.A.Boot and Anjan V.Thakor, 1997. Banking scope and financial innovation. Review ofFinancialStudies, 10(4), pp.1099-1131

Charles W. Calomiris, 2000. U.S. Bank Deregulation in Historical Perspective. London: Cambridge University Press

Eugenia Y. Huang, Chia-Yu Lin, 2005.Customer-oriented financial service personalization.Industrial Management & Data Systems, 105(1), pp.26 - 44

James Dow, 1998. Arbitrage, hedging, and financial innovation. The Review of Financial Studies, 11(4), pp. 739-755

J. Lerner, M. Sorensen, P. Strömberg,2008. Private Equity and Long-Run Investment: The Case of Innovation. The Journal of Finance, 66(2), pp. 445–477

Merton H. Miller, 1986. Financial Innovation: The Last Twenty Years and the Next. Journal of Financial and Quantitative Analysis, 21(04), pp.459-471#p#分頁標題#e#

Robert J. Shiller, 2008. The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It. New Jersey: Princeton Press

Robert Merton, 1992. Financial innovation and economic performance. Journal of Applied Corporate Finance, 4(4), pp.12-22

Robin Pearson, 1997. Towards an Historical Model of Services Innovation: The Case of the Insurance Industry, 1700–1914.The Economic History Review, 50(2), pp.235-256

Zvi Bodie and Robert, Merton, 1999. Finance. New Jersey: Prentice Hall

STEPHEN A. ROSS, 2012. Institutional Markets, Financial Marketing, and Financial Innovation. Journal of Finance, 44(3), pp. 541-556