Financial Function of Governments and the Development of Local Financial Industry

Owing to incompleteness of competition existing in China’s financial area, information asymmetry and externality of financial activity, it’s compulsory for governments objectively to interference with financial activities. Local financial industry should be developed in order to develop local economy. There is certainly risk in developing local financial industry, but there is objective inevitability and feasibility. Therefore, there must be a correct cognition for local government and finance. After the common cognition is in place, a local government financial reformation and development leadership team may be founded in various places, granting it corresponding function; the government leads to establish a local financial stability coordination mechanism so as to better develop local economy.