Business Diversification Of Commercial Banks Under Financial Supervision

This dissertation looks at the current situations of commercial banks and finds out that the businesses of commercial banks are very much confined and simple, and that these banks have few financial innovations and new clients but accumulated large amount of deposits, which have almost become the major business of these banks in sharp contrast with the amount of loans and an increasing ratio of bad assets, also, that these banks have very few off-sheet business and middle business. This situation cannot cope with the development needs awaken by the competition after the entry of WTO and the reform of banking industry. The reasons are of two kinds: one is the traditional business regime and the other is the financial supervision. The current financial supervision mode, in particular, has restricted these commercial banks from developing to a great extent. This dissertation discovers that different financial supervision modes have different effects on the commercial banks. In order to share a place with the world's leading banks, a reform is needed for the Chinese commercial banks, which also means a corresponding adjustment to the current supervision mode. Learning from the world's financial supervision modes, a good supervision mode can push ahead the development of commercial banks. However, the mode has both negative and positive influences on the business diversification of commercial banks, which in return challenges the mode.It is the author's assertion that a financial supervision shall mainly focuses on risk control, bit it shall also help to diversify commercial banking business. It is witnessed by the world that the supervision mode has changed from industry-specific to general, from institutional to functional, from unitary to overall, from confined to open. Our supervision mode shall go with such a worldly trend and develop step by step into a better one.Now with the formation of the Banking Supervision Commission, the Chinese financialsupervision system has evolved into a new phase with other authorities like the Securities Supervision Commission and the Insurance Supervision Commission, and the centralized supervision conducted by the central bank since the 1950s has also come to an end. The formation of the Banking Supervision Commission is an important step forward for the financial system to head for more market reforms. It helps to enhance supervision, reduce risks, and maintain the safe operation of the financial system.Financial supervision correlates to the business diversification of commercial banks. Banking innovation is required by its development: making full use of talents to develop new products and meet different needs, thus building up banks' specialities and brands.This dissertation suggests our commercial banks shall take measures to diversify and innovate their business, which heavily relies on the values of financial supervision. In order to realize the diversification under supervision, we need to build up a new supervision mode, that is. the one which supports business development and challenges and takes risk prevention as its basis.