Financial Mixed Management Impact On Systemic Risk

As a symbol of the United States issued the "Financial Services Modernization Act" in 1999,the financial industry of world's major developed countries have experienced a change from separate operation to mixed,completely changed the overall pattern from a legal and practice,which is the "Glass-Steagall Act" established financial separated operation after the Great-Depression in 1929-1933.From the next decade,the financial sector has a great development under the mixed.However,the outbreak of the US subprime mortgage crisis in 2008 makes us to have a new understanding of the finance mixed in another dimension: Enterprises to shareholding,equity participation in more than two sub-sectors of the business mode of operation,on the one hand its enjoy the high returns,on the other hand it is also facing greater financial risks,once in the event of chain or other business risk,it will give enterprises Itself and the normal operation of the entire economy and society have a greater negative impact.To some degree,mixed management is behind reason of the subprime mortgage crisis.Mixed management is a double-edged sword,we should not only realize the disadvantages of mixed management,at the same time we must be clearly aware of the mixed operation brought about by the increased difficulty of management,business risk aggregation and other aspects of the drawbacks.Under the big background of the development of economic globalization,mixed operation is undoubtedly the inevitable trend of long-term development of the financial industry,and it is also an effective way to expand the enterprise scale of development and enhance the core competitiveness.In October of 2005,in the 11 th Five-Year Plan for the first time put forward the concept of ‘integrated management',from the State Council approved the pilot of the mixed financial operations such as China PingAn,CITIC Group,China Everbright Group,China Merchants Group,to the establishment of financial groups of the banking,insurance,securities,asset management companies,industrial groups,local government platforms etc.,presaging the arrival of the era of "big finance" of mixed management in China.Therefore,the study of mixed management not only will help the mixed management in financial institutions against market risk factors,establish and improve risk warning mechanism,but also to improve our financial industry regulatory standards and has great practical significance and theoretical value.Firstly,this paper analyses the mixed management and its risk.From two aspects of benefits and costs are discussed the pros and cons of the mixed management,and demonstrates the general inherent risks of the mixed management and the special risks of financial mixed management in China;After then,the mechanism of the mixed management affect systemic risk are expounded,which explains the theory of "U" type of mixed management in financial institutions impact on systemic risk: within a reasonable range of mixed management can not only expand the scale of the development of financial institutions,but also can help financial institutions to effectively reduce systemic risk.Conversely,it will greatly enhance the systemic risk and particularly illustrates the systemically important financial institutions and non-bank business amplification effect of systemic risk.Secondly,this articl used the data of the China's listed financial holding group,analysising the influence of mixed operation to systemic risk.Establishing the model of nonlinear panel delve into the intrinsic link between the systemic risk and mixed management,using the Herfindahl-Hirschman Index(HHI)to represent the degree of mixed management,using the method of marginal expected loss(MES)to calculate the influence degree of the mixed management to systemic risk,using the HHI square to indicate the degree of influence between the two.Research showed that there is a significant "U" traits between the financial mixed management degree and systemic risk,namely When the degree of financial mixed management over the range of financial institutions can afford,mixed management not only cannot promote the core competitiveness of financial institutions,but also raise the systemic risk of financial institutions.Third,it summarized three types of international mixed management mode and regulation system,and has carried on the comparative analysis,respectively according to different forms of mixed management and regulation system,there are different regulatory practices.This article generalizes the three kinds of regulatory form: umbrella supervision,uniform supervision and regulation of bimodal,and comparative analysis,and reviews the mixed management reforms of the Britain,France and the United States after the financial crisis.Summarizes the experience of the countries mixed operation system reform in post-crisis based on systematic risk prevention,provide reference for the reform of China's mixed management regulation reform.Fourth,since China's reform and opening up,China's financial industry development has experienced the process of "spontaneous mixed-strictly separate-mixed operation",on the basis of the development and current situation of financial mixed operation,this paper analyzes the impact of the financial crisis on China and development practical conditions of mixed operation after the crisis,including changes in response to the needs of the competition,customer demand as well as the present situation and so on.Compared with the regulatory framework of separate supervision,however,it is the contradiction between the current business model and separate supervision.Therefore,this article is based on the basic principle and characteristics of the developed countries in financial mixed reform,from the perspective of financial regulatory reform in our country analysis and demonstrates the focus of the reform of financial supervision system in our country,the reform scheme and the direction of the future.Fifth,through empirical analysis,we learned that China's financial mixed management is still at the primary stage of development,the lack of the sound regulatory system,while showing a good development prospect,but with the expected performance goals there is still a large gap.Based on the status quo,the author proposes to improve the system of financial mixed operation and puts forward some policy Suggestions:First,consummates the mixed management in financial legislation safeguard mechanism,creating a favorable policy environment for its,promote the sustainable development of financial mixed operation;Second,optimize the mode of organization,early stage of development for enterprises through different ways of expanding its business scope,the formation of mixed management in a variety of forms,then gradually to the developed countries group holdings model transformation;Third is to strengthen the functions of regulation,from supervision coordination,regulatory framework and regulatory capacity,a few aspects,such as increase of mixed management in financial supervision and management,and strengthen the standardization of financial mixed operation.Based on the study of the scholars at home and abroad,this paper mainly focuses on the impact of China's mixed management to systemic risk,therefore,the author thinks that the innovation of the prose is mainly manifested in the following several aspects:First,according to the previous proposed theoretical assumptions of "U" type of mixed management to systemic risk,this paper expounds the inner link between systemic risk of the financial institutes and the mixed management.By consulting relevant literature,we can found that the vast majority of scholars on the analysis of the inner link of the process,from the organizational structure,influence factors and efficiency and so on several aspects,there are few scholars from the perspective of systemic risk,specifically for mixed management in financial systemic risk research are much rarer.Second,on the basis of systemic risk and mixed internal relations,construct nonlinear panel models intended to verify financial mixed with systemic risk "U-type" hypothesis.By nonlinear panel model,the author studies the intrinsic link between systemic risk and financial mixed,and and the introduction of non-linear quadratic model panel.According to the quadratic term coefficient reflects the results: the mixed management and systemic risk is nonlinear characteristics,namely the process of mixed management in financial institutions will be accompanied by a certain degree of systemic risk,as the degree of mixed management in financial institutions gradually deepened,systemic risk will be reduced,after increasing.Third,summarized the main financial mixed management mode and regulation mode,on the basis of the western developed countries in the process of financial mixed management of systemic risk,as well as the analysis of the corresponding measures of risk aversion,especially after the outbreak of the financial crisis,based on the perspective of avoid systemic risk,the Britain,USA and France for their mixed operation system to make the adjustment and reform,from which we sum up the experiences and lessons,to provide experience for the mixed management system reform of our country's present and using for reference.Fourth,from the current situation of mixed operation in China,the author demonstrates the enlightenment of the financial crisis on China's mixed operation and the opportunities and challenges of the future development of mixed operation in China.Combined with the practice of financial mixed operation in China's,the author demonstrates and thinking the focus of supervision system reform,limitations and programs for the overall.Some suggestions were put forward to perfect the financial management system of our country,such as optimizing the organization mode,strengthening the function supervision and perfecting the legislation of the financial mixed operation.