Study Of Financial Conglomerates And Risk Management

Financial conglomerate becomes the dominant trend of financial industrydevelopment of the world. The Financial conglomerats companies have to face a seriesof questions, such as option of the mode of Financial conglomerate opreation andsupervision, risk analysis, financial risks measurement, allocation of Economic capitalwithin the firm, etc. inside financial mixed operation organization. The paper used thequantitative method and qualitative one wich combined the experience of the westerncountries and our country's real conditions to carry on research to the above-mentionedproblems of financial conglomerate operation.1. The mode of financial conglomerate was studied. Fistly, carried on thediscussion to the mode of financial conglomerate of the main countries of the west.Then used the triangular fuzzy number evaluation and AHP model to evaluate themode of financial conglomerates and proposed the 5 index potential income indexesincluding information advantage, scale economy, range economy, pluralismof incomeflow and cross-selling, and 6 index potential cost indexes including reducingcompetition, interests conflict, related trade, expansion of government's safety net,control of cost and supervision cost as their appraisal factor index collections.2. Supervision validity analysis of the financial conglomerate. Fistly, carried on acontrastive analysis on the supervision mode of financial conglomerate of the maincountry of the west, and drawn the development trends and main characteristics of thesupervison mode of the whole world at present. Then used economic cost-benefitanalytical (CBA) to analyse the supervison mode of financial conglomerate, combiningwith economics theory.3. Risk analysis of financial conglomerate. Analysed the reasons of carrying onfinancial risk management of persons who are correlated with of interests at first,secondly emphatically studied risk type and assessment method faced in financialconglomerate. Furthmore proposed the risk management frame of financialconglomerate on the basis of the aforesaid.4. Risk measurement of financial conglomerate was studied. Used methods suchas VaR and Copulas function to measure the risk of the financial conglomerate first ofall, and set up Copula-VaR model for risk measurement. Then compared with severalrisk measurement VaR methods, and defined diversification benefit (DB) of invest.5. Allocation of economic capital of financial conglomerate. Given amathematical model for determination of the amount of economic capital to eachsubsidiary company in one finacial group. On basis of it, demonstrated that there wasvirtual economic capital within financial conglomerate, as a result of existence ofdiversification benefit (DB).6. Analysed the operation and supervision mode of financiaol conglomerate of ourcountry, and combined real condition. Then jumped a conclusion that financial holdingcompany may be a main mode for China developing financial conglomerate. Contrastpurely industry holding mode, the finance company holding is given priority todevelop. Also got that the detached financial supervision mode will gradually transit tothe uniform one, and the supervise function should separate from central bank. Finally,given a analysis to the risk of financial conglomerat of our country.