Research On The Development Of Financial Industry Convergence

With the accelerating process of global information technology, the development of industry economic on the convergence trend gets further development and promotes the convergence process of the world economy. In recent years, academia pays more attention on the convergence trend of industry convergence gradually, however, less on the financial industry. Convergence of China’s financial industry has been initially apparent, but the degree of convergence is not high. For the environment liberalization of the financial convergence, the enhancement of the financial industry international competitiveness, the earlier realization of the modernization and internationalization of the financial industry, much more works should be done. Therefore, this paper treats the convergence of the financial industry as the research object, has strong theoretical and practical significance.This paper is organized as follows:The Chapter One is introduction. Introduce the research background and significance of the article, research content and framework, research methods, innovation and inadequate.The Chapter Two is the theoretical foundation and literature review. First of all, based on previous studies, summarize the connotation and extension of industrial convergence, propose the definition of the basic concepts of financial convergence. Then analyze the industrial convergence phenomenon under the general industrial environment, followed by the discussion on the mechanism and the effects of industrial convergence. Then sum up the modern theory of financial intermediation, financial assets, the characteristics of homogeneity and the basic theory of modern evolutionary economics, and treat these as the theoretical basis of this study. This paper points out that the convergence phenomenon which appears in the financial industry contains three levels, namely, the convergence of the financial industry and information industry, the internal convergence of the financial industry and the industry-financial combination.Three levels of financial industry convergence have been given in detail from Chapter Three to Chapter Five, followed by the analysis and discussion. By reviewing the development process of domestic and international financial industry convergence, the convergence motivation, development models and paths, the effect at each level are summed up, and the development strategy of China financial industry is also proposed.Chapter Six contains advisements and countermeasures for China financial industry convergence. Firstly, four key issues have been given which must be addressed by the financial industry convergence, and methods are given for financial industry convergence. Then views in this paper about the measures for our country and financial institutions in the background of financial industry convergence development are proposed.Chapter Seven includes conclusions and prospects. Conduct a comprehensive summary of this paper, and look in the future of convergence development trend of China’s financial industry.The main conclusions of this paper are:Convergence phenomenon in the financial industry has not only basic characteristics of the general industrial convergence, but also some special characteristics. The convergence of the financial industry should include three levels:the convergence of the financial industry and information industry, the internal convergence of the financial industry and the industry-financial combination. There are distinction and relationship among these levels:the convergence of the financial industry and information industry contributes to the modernization of the financial industry, and provides fundamental technical condition and material basis for the internal convergence of the industry-financial convergence. The financial internal convergence is the consequence of diverse business industries convergence process. Industry-financial convergence is a natural extension of this process. Internal convergence and industry-financial convergence in turn intensify the convergence of the financial industry and information industry.The financial industry convergence and development is a dynamic process of evolution. The financial industry have experienced the process:simple convergenceâ†'separateâ†'new spiral process of convergence, by the game and the balance among financial institutions and regulatory authorities in the benefits and risks. According to the evolution of economic theory, innovation, time factors, the heterogeneity of the economic itself search, its choice behavior and so have the major impact on the financial industry convergence process. Therefore, China’s financial industry should be combined with the actual situation of the macroeconomic environment, development status of the financial industry and financial institutions to determine the convergence development strategy:1The information strategies:the convergence of China’s financial industry and information industry, should be established on the basis of information strategy, through the improvement of information sharing technology and information processing systems, to promote information technology in business processes and decision-making process, to speed up financial innovation of product information, complete the financial information system, the transformation of the security measures to ensure the robust development of the financial industry.2The internal convergence strategies:the internal convergence of China’s financial industry should be subordinated to the principle of maintaining the core competitiveness of financial institutions, take bigger and stronger, large financial institutions, small and medium-sized financial institutions to do specifically meticulous development strategy. For the development of mature, risk control, diversification needs of financial, institutions should start through the setting up the mixed operation of the subsidiary firstly under the premise that proper risk control, diversification strategy, the eventual are transmitted into the establishment of integrated business financial holding company model. For small and medium-sized financial institutions, should promote the characteristics of management and professional development in order to encourage the nurturing core competitiveness in the professional field or market segments.3Industry-convergence strategies:China should improve the efficiency of resource allocation, improve the core competitiveness of the financial industry, the extended enterprise value chain, control and risk-averse objective, and select the two-way combination of market-based approach to the implementation of the convergence. Group of large industrial and commercial enterprises and large state-owned commercial banks, as well as large-scale joint-stock commercial banks as the main driving force, while fostering new financial strength, insurance, trusts, funds, securities and investment banking, innovation and the development of effective production and finance combination of multi-channel, multi-means of the convergence of multi-level finance system.Conflict of interest, risk of infectious, capital adequacy ratio regulation, and monopoly and market concentration are the four key issues which must be addressed by the financial industry to go the convergence route. This should be through the strengthening of external regulation and internal control and the establishment of the "Chinese wall" system of self-discipline barrier mechanism to solve the financial sector convergence in the development of interest conflicts, by improving the corporate governance structure, the regulation of related party transactions, the establishment of "firewall" system and the risk of infectious problem; should be used in the capital adequacy ratio regulation and consolidated supervision to prevent a financial holding company use of complex financial relationship to avoid regulation; excessive concentration of financial sector convergence of development may lead to monopoly and market should be through the improvement of anti-monopoly laws and regulations, strengthen financial supervision and measures to foster pluralism and multi-layered financial market structure to be resolved.The innovation of this article may have the following three points:First, the paper explains the convergence trend from the industrial perspective innovatively, including the operation and development trend of the financial industry, reasons for convergence of domestic and international financial industry, the convergence motivation, the effect of convergence, and convergence of the development process must be addressed as key problems, establishes the financial industry convergence system framework.Second, this paper proposes the convergence of the financial industry which should include the convergence of the financial industry and information industry. The internal convergence of the financial industry and the combination are the three aspects. This paper also pointes out that the convergences of the financial sector and information industry achievements are in the modernization of the financial industry, for its internal convergence and the combination of the fundamental conditions and material basis. Within the financial industry convergence, horizontal convergence results are diversifying business areas, the convergence is a natural extension of this horizontal convergence. Internal convergence of the financial industry and the convergence in turn deepen the financial sector and information industry convergence.Third, evolutionary economics analysis, analysis of the convergence process of development of the financial industry are introduced innovatively, pointing that the convergence of the financial industry is one of the dynamic evolution process. Financial institutions, regulatory authorities in the benefits and risks between the game and the balance of the financial industry has undergone a simple convergenceâ†'sub-industryâ†'new spiral process of convergence, all of the innovation in the evolution of economic theory, the time factor, the heterogeneity of economic agents and their search and choice behavior have major impacts on the financial industry convergence process.Shortcomings in this study are:First, theory of industrial convergence is not presented systematic. Industrial convergence is still at evolving stage. At academia, industry convergence theory, especially the financial sector convergence development theory, is still not mature enough and perfect. The paper attempts to build a complete conceptual framework for convergence of the financial industry, however, lacks the description of the current industrial convergence phenomenon in-depth and the explanation of the economic. The internal mechanism of industrial convergence and financial industry development are still not thorough enough.Second, lack of further projects and outlook on the convergence trend of the financial industry. With the development of the world economic liberalization, market-oriented, information industry will be ever-changing financial laws and regulations, at any time to change or open, which makes the convergence of the financial industry constantly developing. The article only comes from three levels of financial industry convergence which are the financial industry and information industry convergence, internal convergence and the financial industry convergence. However, for the future of the industry which may become the convergence mode of development, need more study.Third, lack the quantitative analysis. As China’s financial industry convergence is not at high level of development, the less relevant data, this study focuses on the qualitative description, lacking of quantitative analysis and empirical researches on the development of financial industry convergence. Only combining qualitative analysis and quantitative analysis can further enrich the industrial convergence theory.