Research On The Legal Apprach To The Risk Management Of Financial Holding Companies

In China, the financial market is separated in both operation and regulation. However, financial holding companies are playing a special role in the financial market, for they represent the trend of mixed financial market. On one hand, Chinese laws and political strategies have left enough space for the being and development of financial holding companies. On the other hand, however, laws regulating financial holding companies are still absent. After the recent financial crisis all over the world, financial laws and some new developments in many other countries or regions in the world, among which laws concerning financial holding companies is a key one. The key of financial holding companies'regulation and security is the management of risk. Therefore, this report will focus on the legal approach to the risk management of financial holding companies. As for the structure of this report, there will be four chapters. The first chapter will be the general description of financial holding companies. In this part, the concept of financial holding companies will be analyzed. There will also be a detailed description of the development of financial holding companies. The second chapter will be the analysis of financial holding companies' risks, including the risks of each financial holding company or its controlled company and the risks of the whole group. The risks of financial holding companies do have the characteristics of centralization, transformation and destructive. Several kinds of risks are the risk of industry, risk of capitalization, risk of operation and risk of management. Special attention should be paid to the transformation of risks. Here the reasons of the transformation and the ways of the transformation will be analyzed. The systematic risks will also be mentioned here. The third chapter will be the models of legislation and the methods of risk management. The alternatives of models of legislation may be the special financial holding company law or other relevant laws. The methods include the internal risk management and external regulation. The fourth chapter will be the comments of China's legal approach to risk management of financial holding companies and possible improvements. First, there will be an analysis of current legal approach. Then constructive advices, which rest on the conclusion above, will be offered. The advices cover both improvements on legislation and regulation.