Research On The Prevention Of Financial Holding Company Risks

In recent years, the tide of integrated financial operation swept the world and financial holding companies developed rapidly in the US, Britain, Japan and other areas. However, the financial industry in China has many difficulties facing the tide of integrated financial operation because of the present system of separated operation and separated supervision. Financial holding company is the realistic choice for China's financial industry in the transition from separated operation to integrated operation, because the characteristic of "integrated operation for the group and separated operation for legal entities" can be realized. In fact, financial holding companies have emerged in China. But the organizational features of financial holding company can induce some particular risks. Therefore, how to prevent the risks of financial holding company has become an important issue.The thesis is the result of research on the prevention of financial holding company risks and is composed of five chapters. Chapter 1 explains the intention and significance of the thesis, the status of related researches home and abroad and the research methods. In Chapter 2, the thesis at first analyzes the definitions of financial holding company in the law of Taiwan and the US and defines the financial holding company on the mainland of China, and then analyzes the reasons for the emergence of financial holding company, including the economy of scope, the economy of scale and the effect of portfolio. At last, this chapter analyzes the development of financial holding companies in the US, Britain, Japan and China. Chapter 3 analyzes the risks of financial holding company, including the contagion of risks, the conflict of interest and the overlapped calculation of capital. Chapter 4 probes the organizational systems for the prevention of financial holding company risks, which include the selection of external supervisory models and the build of internal risk management system. The external supervisory models include diversified model and unified model. The thesis compares the two models and offers some suggestions to the selection between them for China. As regard to the build of internal risk management system, the thesis analyzes the perfection of the corporate governance and puts forward some suggestions to the selection between internal risk management models. Chapter 5 analyzes the countermeasures for the prevention of financial holding company risks, including the build of firewall in the financial holding company and the approaches for avoiding the overlapped calculation of capital. This chapter examines the firewalls in the financial holding companies in the US, Britain and Taiwan and offers some suggestions to the perfection of the firewall in the financial companies on the mainland of China, and analyzes the approaches for avoiding the overlapped calculation of capital, including the Building-block Prudential Approach and the Risk-based Aggregation Approach.